Australia’s Buy-Side Gets MiFID II Ready

Australia’s large and sophisticated buy-side community are watching developments on the geopolitical front to prepare for any disruption to their investments, whilst reviewing the implications of Markets in Financial Instruments Directive or MiFID II on their operations and equipping themselves with the necessary technology and processes to prepare for the new regulation that will come into play in January 2018.

Across the globe this year, Bloomberg has organized buy-side symposiums in Singapore, New York, Seoul and Sydney. These symposiums brought new and thoughtful perspectives to a growing community of asset managers, asset owners, pension funds, insurers, family offices and hedge funds.  In our polling of participants, some themes that surfaced from this year’s Bloomberg Buy-side Forum in Sydney include:

• 41 per cent of Australian investors polled view geopolitical risks as having the most potential to disrupt the industry in the next 12 months. Over 34 per cent of respondents cited China’s growth outlook and evolving policy landscape as the biggest geopolitical risk to investors, followed by equal votes (26 per cent each) for risks arising from Trump’s trade policies and changes in Europe’s political landscape.

• Over 40 per cent expressed concerns that MiFID II will have the largest impact on their business, and RG97 followed 2 percentage points of votes behind. ASIC’s Regulatory Guide 97 requires superannuation and managed investment products to disclose detailed fees and costs.

• Similar to our polling results from a year ago, Australian investors continue to look beyond domestic markets with 88 per cent saying they currently are or plan to invest outside the continent. When investing overseas, 61 per cent of Australian investors polled chose equities over 23 per cent who would invest in alternatives such as hedge funds, private equity and infrastructure.

• China continues to be a focus for overseas investments with 32 per cent of respondents indicating it as the market that holds the highest potential for diversification compared to 22 per cent who voted for Europe and 20 per cent who voted for US. Few are looking at Japan, Singapore or Hong Kong but 22 per cent thought that frontier markets in Asia including Myanmar, Vietnam and Cambodia are promising destinations.

• When quizzed about social impact investing, close to half of respondents (48 per cent) indicated that they are already engaged in it, 30 per cent will likely adopt it, and approximately 22 per cent who said they are unlikely to do so.

• As the buy-side continues to evolve, connectivity to the international markets has never been more important to Australian investors. 74 per cent of investors polled indicated that technology helps them streamline their workflow from front to back office, and close to a fifth (18 per cent) said it helps them comply with regulatory requirements.

As the world’s biggest financial platform, Bloomberg understands and continues to innovate around our clients to create practical technological solutions that allow the buy-side to focus on what they do best – generating alpha. We have built an integrated buy-side technology platform of the future – across portfolio management, operations, trading, post-trading and compliance.  Our entire suite of buy-side solutions efficiently streamlines workflows, supports future growth and ensures that our clients will always be compliant.