MiFID to quiz Danish regulator

Copenhagen-based agency says MiFID II has unleashed the most requests for clarification

The countdown to the January adoption of a new set of regulations for Europe’s financial markets has started. But in Denmark, it’s still raising some fundamental questions.

What constitutes marketing? Is putting an investment product on a Web-based platform, along with hundreds of others, the same as actively selling it? How do you estimate cost? Does recommending a mortgage backed by a bond constitute investment advice?

These are some of the issues Denmark’s Financial Supervisory Authority is tussling with just weeks before a revision of Europe’s Markets in Financial Instruments Directive is to be implemented.

“I tried to count Q&As on MiFID and I gave up,” Birgitte Holm, deputy director and the person responsible for MiFID at Denmark’s FSA, said in an interview in Copenhagen. Among the issues the FSA is still trying to resolve are these:

Marketing: “The key word here is marketing and how to define marketing and selling,” Holm said. It seems straightforward but the problem is this: banks offer on their websites an array of investment products, with some lists topping 1,000. If the FSA concludes that listing products constitutes marketing, banks will have to provide full product and cost information for each. That’ll drive up expenses and probably lead banks to drop the products.

Denmark’s financial industry is urging the agency to consider a more limited definition of marketing so that doesn’t happen.

“We’re asking the Danish supervisory authority to define ‘marketed and recommended’ in a way that it does not limit consumers’ ability to invest in an investment fund of their own choosing,” said Anders Klinkby Madsen, director of investing at Finance Denmark, which represents the financial industry. Denmark should maintain its socalled open architecture, at least until the European Securities and Markets Authority says otherwise, he said.