SEC issues three no-action letters on Mifid II research provisions

Following a consultation with the European authorities, the SEC issued three no-action letters that deal with access to research and will help provide certainty on US business procedures ahead of Jan 3, 2018.

The no-action relief allows firms to comply the Mifid II research requirements in a manner that is consistent with the US federal securities laws:

– broker/dealers on a temporary basis may receive research payments from money managers in hard dollars or from advisory clients’ RPAs

– money managers may continue to aggregate orders for mutual funds and other clients

– money managers may continue to rely on an existing safe harbor when paying B/Ds for research and brokerage

Chairman Clayton in a release said the relief was designed to “reduce confusion and operational difficulties that might arise in the transition to Mifid II’s research provisions” and to “preserve investor access to research in the near term”. He also pointed out the instrumental cooperation with the European Commission and the additional guidance the EC published.

The relief is intended to give staff sufficient time to better understand the evolution of business practices after the implementation of the Mifid II research provisions.

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