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SIFMA Seeks Permanent Relief on MiFID II Impacts; Blass Notes Industry Efforts to Comply

The Securities Industry and Financial Markets Association (“SIFMA”) recently submitted a comment letter to the SEC, urging the Commission to provide permanent relief by rule or exemption allowing broker-dealers to charge separately or receive cash payments for investment research without the broker-dealers being deemed investment advisers under the Investment Advisers Act of 1940. “While the SEC staff’s October 2017 no-action relief was critical to minimize disruption triggered by the European Union’s MiFID II directive, which effectively requires investment managers impacted by MiFID II to unbundle—that is, to pay for research separately from client trading commissions—permanent and broader action is now needed given broader changes that are occurring in the global research marketplace,” SIFMA wrote.In a recent speech Dalia Blass, Director of the Division of Investment Management, addressed the industry’s MiFID II concerns and indicated that the staff’s temporary relief may not be necessary in the long term. “[T]here are indications that market solutions are developing that may make extending the no-action relief unnecessary,” Blass said noting that some fund managers are using reconciliation or reimbursement processes to deliver cost transparency, for example. She encouraged additional industry comments to address questions such as whether it would be appropriate to address direct, hard dollar payments under Section 28(e) of the Securities Exchange Act. 

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