Only a handful of local authorities have not been opted up to professional client status by the sector’s two main treasury advisers under the MIFID II regime, which came into force this week.
The new European Union rules, introduced in response to the financial crisis of 2007, regulates the provision of financial instruments to clients of financial service companies.
Local government appears to have come through the process of opting-up from their default retail status relatively smoothly, according to many in the sector.
David Green, client director at treasury adviser Arlingclose, said: “A total of 93% of our local authority clients have successfully opted up to remain professional clients. There have been no issues that I can think of.”
And David Whelan, managing director of Link Asset Services (formerly Capita Asset Services), said: “There are only a handful of our clients which have not opted up. It proved a very simple process for us.”
Roy Parsons, principal accountant at Sevenoaks District Council, said that his council was opting up with some firms but not with others.
He said: “We have opted up with our brokers, treasury advisers and some money market funds. However, a couple of MMFs don’t require us to have elected professional status and there is no point in doing it with them.”
Some brokers have chosen not to take on clients that do not opt up, while others are offering services to the small group that choose to remain with retail investor status.
Paul Turner, director of public sector at dealing and custody firm King and Shaxson, said: “We already have the necessary permissions in place and I have passed the exams enabling me to speak to retail clients.
“It doesn’t affect the service — our clients can all deal in all the instruments we deal in.”
It is understood that a small number of authorities have made the decision not to opt up to professional status because they believe they will enjoy higher regulatory protection under retail status.
However, one source in the broking sector said this was a misapprehension.
He said: “If you remain retail, the fees will be higher. You have to do more hand holding and it involves more work.
“The Undertakings for Collective Investment in Transferable Securities regulations, plus new and existing MMF protections, mean there is plenty of protection for professional clients now.”
David Couling, broker at Tullet Prebon told Room151: “I think it has gone through as well as can be expected, given that it was new ground for everybody, and a lot of hard work.”
He said that some of his clients had used the Public Sector Link portal, run in conjunction with CIPFA, to process their requests to opt-up while others have approached his firm directly.
