The IMA said it disagreed with the European Securities and Markets Authority’s claim because “many non-UCITS funds are in fact less complex than many UCITS”.
It added that, post-MiFID II, UCITS funds will potentially incur “hugely expensive” costs, including the introduction of appropriateness tests through fund platforms.
As a cheaper alternative, it suggested allowing national regulators to establish test regimes for UCITS funds to assess whether they “meet the definition of non-complex instruments”.
It added that it supports regulators’ efforts to encourage transparency through the Markets in Financial Instruments Directive review, but felt that ESMA’s post-trade transparency proposals for fixed income were “inappropriate”.
'Shallow liquidity'
“Our alternative [transparency] proposal is calibrated to the underlying liquidity of the instrument,” it said. “Such an approach will not hamper the already shallow liquidity in fixed income markets.”
The association also said it agreed with the European Commission’s claims that market data costs in Europe are too high, proposing a high-level cap on the revenue that trading venues can generate from data provision.
The IMA’s comments came after ESMA publicly released the responses it received to its consultation papers on MiFID II yesterday.
ESMA published its first consultation paper on the translation of MiFID II requirements into practically applicable rules and regulations back in May, before giving the industry a chance to provide feedback.
MiFID II, which will not be fully implemented until 2016, will address the residual effects of the financial crisis by improving financial market transparency and strengthening investor protection within the insurance and investment market.
