CIPFA is working on a project to simplify the process for local authorities to supply critical information to hundreds of financial institutions tasked with testing whether councils qualify for “professional’ investor status under new MiFID II regulations.
The move comes as councils up and down the country await the result of a Financial Conduct Authority (FCA) consultation on how councils will qualify for professional status. Many fear the current proposed criteria will rule them out, thus reducing investment opportunities.
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Though the regulatory demands are yet to be finalised, CIPFA’s project will be kick-started with research designed to see how the information needed to satisfy MiFID II requirements can be standardised and, as a result, reduce the burden on councils. The intention is to provide the data through a dedicated portal.
If successful the portal could dramatically reduce the complexity involved in up to 400 councils supplying treasury and pension find information to hundreds of financial institutions.
Neil Sellstrom, treasury management and pensions advisor at CIPFA, said: “What we are looking to do is develop a solution that will be beneficial to both sides — local authorities and financial institutions.”
One fear that has emerged is that whatever the result of the FCA’s consultation, financial institutions may apply different tests to see if local authorities meet the criteria. Standardised information would help treasury and LGPS officers provide information only once for all institutions to access.
Sellstrom stresses that CIPFA is not attempting to “dictate” the tests applied by institutions, but “offer some help in that space”.
He added: “The administrative burden could be huge if the financial institutions have different tests.”
The FCA has been considering concerns about MiFID II including the £15m asset ownership floor which would rule many councils out of professional status. There are also concerns over the criteria for deciding whether someone managing treasury of pension fund assets is qualified to be considered “professional”.
CIPFA’s MiFID survey for LGPS can be found here.
The survey for local authorities is here.
Financial institutions can fill in their survey here.
