Issue - meetings
MiFID II Opt Up Plan and Carbon FootPrinting of Tower Hamlets Pension Fund
Meeting: 21/09/2017 - Pensions Committee (Item 5)
5 MiFID II Opt Up Implementation Plan PDF 107 KB
Additional documents:
- Enc. 1 for MiFID II Opt Up Implementation Plan, item 5 PDF 77 KB
- Enc. 2 for MiFID II Opt Up Implementation Plan, item 5 PDF 138 KB
- Enc. 3 for MiFID II Opt Up Implementation Plan, item 5 PDF 67 KB
Minutes:
Bola Tobun, Investment And Treasury Manager presented a report which outlined the impact of the implementation of the Markets in Financial Instrument Directive 2014/65 (“MiFIDII”) and in particular the risk to the administering authority of becoming a retail client on 3 January 2018. The report recommends that the Committee decide that elections for professional client status should be made on behalf of the authority immediately.
Tower Hamlets Pension Fund will not able to access the wide range of assets needed to implement an effective, diversified investment strategy when the Markets in Financial Instrument Directive 2014/65 comes into force on 3rd January 2018 unless it applies for a change in status from a retail client to a professional client. Remaining as a retail client will significantly restrict the range of financial institutions and instruments available for effective and efficient management of the Fund because many institutions currently servicing the LGPS are not authorised to deal with retail clients and are unlikely to choose to undergo the required changes to resources and permissions in order to do so.
The Committee held a discussion about the Professional Clients status and noted that this classification group was entitled to fewer protections under the UK and EU regulatory regimes in comparison to Retail Clients and requested that this be recorded in the minutes. There will be a number of areas affected following the change in status and these includes, Communication with clients (including financial promotions), Information about the firm (its service and remuneration) and services offered by the Financial Ombudsman Service.
The Committee noted that they had a number of long standing members on their committee and commented that they may experience some difficulties if their current membership changes The Chair advised the meeting that Political Group Leaders will be written to and asked to re-appoint the same returning councillors back onto the Pensions Committee.
RESOLVED:
1. To note the potential impact on the Fund of becoming a retail client with effect from 3rd January 2018;
2. To agree to the immediate commencement of applications for elected professional client status with all relevant institutions in order to ensure it can continue to implement an effective investment strategy;
3. To acknowledge and agree to forgo the protections available to retail clients attached as APPENDIX 1; and
4. To delegate responsibility to the s151 officer to complete the applications and determine the basis of the application as either full or single service.