MiFID II – action investors need to take
- We are getting our clients ready for MiFID II
- Starting from this week we will be writing to 520,000 clients
- Why this is happening and what investors need to do
- If deadline of 3 Jan 2018 is missed, investors will not be able to place trades
- Not just HL, all investment service and stockbrokers will be doing this over the next few months
What is happening?
We are writing to 520,000 clients this week to ask them to confirm their nationality and ask for a national client identifier (usually a national insurance number). We will be contacting our remaining clients over the next couple of months.
Why do we need this information?
The Markets in Financial Instruments Directive 2 (MiFID II) is new legislation coming into effect on 3 January 2018. The main aims of MiFID II are to strengthen investor protection and enhance the transparency and oversight of financial markets. This legislation also harmonises legislation across the European Economic Area.
MiFID II requires us to confirm investors’ nationality and national client identifier (NCI) by 3 January 2018. The NCI will depend upon nationality, for UK nationals it’s the national insurance number. This will help authorities monitor for market abuse and so protect investors.
How important is it to provide this information?
Investment services and stockbrokers such as Hargreaves Lansdown are bound by this legislation. Without this information, investors will not be able to trade shares, ETFs, investment trusts, bonds and a number of other stock market-listed securities from 3 January 2018. And investors will not be able to take part in certain corporate actions on holdings, should one arise.
What do investors need to do?
For UK nationals, we just need them to confirm their UK nationality and national insurance number. They simply log in to their account and add the details to their account. If we already hold their national insurance number then they will just need to provide their nationality.
For non-UK nationals or those with multiple nationalities we have put together a help sheet (available on request) which shows exactly what they need to do– typically it is a passport number or national/personal identity number.
Why are we asking for this information now?
We have to check these details with clients and want to make sure we have this issue sorted before the 3 January 2018 deadline. All investment services and stockbrokers will be going through the same exercise over the next few months. If investors use multiple services they will have to confirm their details with each provider.