Although the regulation is not expected to impact trustees directly, it is thought that new rules for brokers and asset managers may affect UK pension schemes’ current contractual relationships.

The EU legislation is designed to offer greater protection for investors while injecting more transparency into all asset classes, taking effect on 3 January 2018.

Sacker & Partners LLP have identified several steps trustees should be taking now, which include:

1) Obtain an LEI number – this can be done at the London Stock Exchange, and is necessary for scheme managers to execute trades on behalf of the scheme

2) Discuss charging structures – as a result of an unbundling of charges, managers should consider updating charging structures and determine how research will be paid for in the future

3) Conflicts and best execution – MiFID II requires managers to review and update their policies on best practice and conflicts of interest while taking factors other than price into account

4) Understand reporting requirements – discussions with managers should include asking how new reporting requirements will be covered in any future agreement

5) Test market infrastructure – schemes should be asking managers how the changes to the market infrastructure could impact the mandate of their scheme.

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