The impacts of Mifid II Product governance on financial intermediaries. A possible fintech solution …

Mifid II introduces the requirements on product governance to enhance investor protection by regulating of all stages of the life-cycle of financial products or services and to ensure that firms, which realize and distribute financial instruments or structured deposits, act in the clients’ best interest. To reach this scope, Mifid II set out several Product Governance requirements, that impose to financial intermediaries to implement a product approval process for each new financial instrument they are going to create or for significant changes to existent products. By implementing the product approval process, MifiD II redesign the relationship between intermediaries and clients internalizing this relationship into the intermediaries’ corporate governance processes , because the client’s interest has a central role during all life-cycle of financial instrument from the creation to distribution of financial product. Clients’ features play a fundamental role since the early stage, in fact financial products have to be designed to satisfy the target market’s needs and objective identified for each products. The implementation of a product approval process has a great impact on corporate governance financial intermediaries, because it involves a redefinition of function’s roles and assignment of new tasks. The aim of this paper is to underline the main impacts of Mifid II Product Governance requirements on corporate governance of financial institutions and the necessary efforts to make intermediaries compliant to the new regulatory framework. At the same time, this essay wants to provide an insight about a future research on a fintech solution, to let intermediaries face POG requirements. Furthermore, the authors, with this food for thought about Blockchain, want to underline the importance for financial service industry, of paying attention to Fintech technologies and their several possible applications to win the challenges of new regulatory frameworks, such as Mifid II, and to survive in the new era of Digital Finance.

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Autori: Quirici Maria Cristina,
Titolo: The impacts of Mifid II Product governance on financial intermediaries. A possible fintech solution to face new requirements
Anno del prodotto: 9999
Abstract: Mifid II introduces the requirements on product governance to enhance investor protection by regulating of all stages of the life-cycle of financial products or services and to ensure that firms, which realize and distribute financial instruments or structured deposits, act in the clients’ best interest. To reach this scope, Mifid II set out several Product Governance requirements, that impose to financial intermediaries to implement a product approval process for each new financial instrument they are going to create or for significant changes to existent products. By implementing the product approval process, MifiD II redesign the relationship between intermediaries and clients internalizing this relationship into the intermediaries’ corporate governance processes , because the client’s interest has a central role during all life-cycle of financial instrument from the creation to distribution of financial product. Clients’ features play a fundamental role since the early stage, in fact financial products have to be designed to satisfy the target market’s needs and objective identified for each products. The implementation of a product approval process has a great impact on corporate governance financial intermediaries, because it involves a redefinition of function’s roles and assignment of new tasks. The aim of this paper is to underline the main impacts of Mifid II Product Governance requirements on corporate governance of financial institutions and the necessary efforts to make intermediaries compliant to the new regulatory framework. At the same time, this essay wants to provide an insight about a future research on a fintech solution, to let intermediaries face POG requirements. Furthermore, the authors, with this food for thought about Blockchain, want to underline the importance for financial service industry, of paying attention to Fintech technologies and their several possible applications to win the challenges of new regulatory frameworks, such as Mifid II, and to survive in the new era of Digital Finance.
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One month after the Mifid II tsunami, the City is keeping its head above water

This Saturday, City workers will be able to celebrate surviving through one month of a dreaded new regulatory environment.

Bankers, traders and fund managers were welcomed back from the Christmas break – if they were lucky enough to have one – by the second Markets in Financial Instruments Directive, or Mifid II, touted as the biggest regulatory shake-up in a generation.

Though the new rules had laudable aims, to help increase transparency, reduce costs for investors and minimise market misbehaviour, many across the financial services industry were worried about how this would affect their jobs.

Read more: Day of the Mifids: Controversial EU regulations for the asset management industry finally kick in

A month on, the clues are beginning to emerge as to whether these fears were justified.

What’s changed?

Mifid II spread its tentacles across all areas of capital markets, from investment research to the intricacies of trading.

But some changes have been more measurable than others.

Certain rules attempted to make the world of trading much more transparent, moving business out of “dark pools” – where trades can be executed without being revealed to the market – to regulated exchanges.

Read more: Latest Mifid II hiccup: European regulator delays revealing list of stocks set to be affected by dark pool volume caps

Systematic internalisers (SIs), or investment banks which execute client orders between each other using their own money, have seen their business rocket as dark pool trading volumes have theoretically been capped and opaque broker crossing networks have been banned.

Who are the winners?

These SIs have clearly been one beneficiary of Mifid II – exchanges have even worried they could steal their business. But some of the large investment banks which also offer research will have won in other ways too.

Another aim of Mifid II was to make the investment research market more competitive. It introduced an “unbundling” requirement for fund managers to charge analysts for research, rather than receiving it for free in return for supplying brokers with trading business.

But according to Bobby Johal, of compliance business Cordium: “The regulatory ambition to see a new, fragmented market of smaller high quality providers is yet to be seen.

“If anything, the reverse is true. Firms have reverted to a small number of tried and trusted players in fear of contravening the ban on unsolicited research.”

Read more: Mifid II set to slash analyst jobs and shake up the economics of broker research, according to a new report

And the losers?

It is hard to tell yet how drastically firms will have been affected by the shake-up, and how much they may still innovate to stay ahead.

But Raymond Groen int Woud of Kneip, a platform which helps fund managers comply with regulation when they market and report on their funds, thinks firms that left it too late to think about Mifid II will have struggled at the beginning of the year.

“What we actually observed was a sprint during the last few weeks of 2017 to have the target market information and cost disclosures ready,” he said.

These provisions aim to make it clear to retail investors whether a fund is aimed at them, and allow them to see exactly what they are paying in fees.

Many fund managers have underestimated the difficulty of standardising dates and times, Woud believes.

“We will continue to see teething issues with regards to Mifid II for a short while,” he said. “While some distributors may have given asset managers the benefit of the doubt, if an asset manager is not able to be compliant with Mifid II they are likely to see a drop in sales as well as regulatory compliance issues.”

What does the next year hold?

“We’re now getting to the interesting part of the Mifid II regulation as market structure adjusts to meet the new rules,” said Steve Grob of trading technology firm Fidessa. “Doubtless this will create new categories of winners amongst those firms who can predict these changes and invest accordingly.”

When City A.M. spoke earlier this week to Conservative member of the European Parliament Kay Swinburne, a key author of the Mifid II rules, she revealed that many compromises had been made.

Already the European Union institutions are starting to think about a Mifid III to iron out the creases as they are becoming evident, though she thinks any tweaks will likely be left now until after Brexit.

Until that time, market participants will be left with how to battle with the “best execution” requirement ­– which demands they prove that they have got the best price for their clients.

“We would also expect to see changes in market participants’ behaviour as the best execution obligation is extended to the buy-side and into other asset classes,” said Grob.

Fintech firms have been springing up to help address this challenge, which in turn is providing a host of acquisition and consolidation targets for larger incumbents.

However the trends play out, 2018 looks set to be a busy year.

Read more: MiFID II has gone into effect. At least, some of it has…

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Thomson Reuters introduces Investment Research Marketplace on Eikon to Further MiFID II …

NEW YORK – Thomson Reuters now offers an Investment Research Marketplace on its flagship desktop product Eikon, a solution that enables buy-side firms to purchase research from sell-side contributors designed to inform and complement their investment processes. This solution also helps facilitate buy-side compliance with MiFID II research unbundling requirements.

Thomson Reuters Investment Research Marketplace in Eikon will host subscription based collections of a select number of global sell-side contributors. Buy-side firms will be able to purchase these research collections by contracting directly with Thomson Reuters, and then consume them via Eikon. Any research acquired will be seamlessly integrated with all Eikon research capabilities, including our flagship Advance Research Search, Search & Discover, and Watchlist Pulse.

“In a changing investment management landscape, our buy-side and sell-side clients are looking for new ways to acquire, consume, distribute and monetize research” said Mahesh Narayan, head of Portfolio Management and Research, Thomson Reuters. “This new capability demonstrates our innovative approach to deliver value-driven solutions to our buy-side clients that help enhance the investment process. It also furthers our continuing commitment to provide the market with products that are designed to facilitate MiFID II compliance post-implementation.”

As one of the largest aggregators of real-time research in the world, Thomson Reuters offers a comprehensive portfolio of research-related products for both the buy-side and sell-side, and continues to focus on delivering MiFID II research-related solutions and enhancements on Eikon to help clients prepare. In 2017, Thomson Reuters announced a series of Eikon integrations and enhancements to further align with research unbundling requirements. Thomson Reuters also announced a partnership with Visible Alpha to bring three joint-solutions on to Eikon to track corporate access and sell-side interactions, and a series of search functionality and research management upgrades.

“Accessing research in a seamless way and reaching new users are the two main challenges around MiFID II, this solution will help us to show our independent expertise on a global basis. We consider MiFID II as a strong opportunity for buy-side to open their research providers list to analysts who actually capture alpha,” said Maxime Mathon, head of communications and marketing, AlphaValue.

“We look forward to partnering with Thomson Reuters to further expand our research franchise in Switzerland, Europe, North Americas and Asia”, said Panagiotis “Takis” Spiliopoulos, Managing Director and Head of Research for Bank Vontobel AG.

“Over the past years ABN AMRO has continued to invest in its equity platform. MIFID II, not only generates challenges, such as an increased administrative burden, but also offers new opportunities and business models. We are looking forward to further expand our client base with the help of our dedicated long term partners, such as Thomson Reuters”, said Wim Gille, Head of Equity Research for ABN AMRO.

These tools continue the ongoing series of enhancements and new solutions Thomson Reuters has delivered to the financial industry related to new MiFID II requirements, which were implemented January 3, 2018.

Thomson Reuters

Thomson Reuters is the world’s leading source of news and information for professional markets. Our customers rely on us to deliver the intelligence, technology and expertise they need to find trusted answers. The business has operated in more than 100 countries for more than 100 years. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges. For more information, visit www.thomsonreuters.com.

CONTACT

Brian Bertsch

+1-646-223-5985

brian.bertsch@thomsonreuters.com

Lemuel Brewster

+1-646-223-5147

lemuel.brewster@thomsonreuters.com

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Here’s What Happens When Your Mom Or Dad Steals Your Identity

“We don’t have good statistics on the scope of child identity theft,” Eva Velasquez, president and CEO of the Identity Theft Resource Center, told BuzzFeed News. “But it’s common enough that we hear from people on a regular basis, either parents who are calling us because they somehow found out their children’s information has been used, or kids themselves call us when they are getting a student loan or car loan and find out they have credit history that’s precluding them from moving forward with their lives.”

Minors are attractive targets for identity theft. Because of their young age, they have clean credit reports and often don’t discover the theft until they reach adulthood and apply for credit, John Krebs, identity theft program manager with the Federal Trade Commission, told BuzzFeed News. And their social security number and other personal information is easily available to family members — so easily available that there are cases of parents secretly using their adult children’s information to open lines of credit.

Hailee, a 23-year-old community college student in Pennsylvania, told BuzzFeed News she is working off $500 in debt on a credit card she didn’t know existed until recently. Her mother opened the account in her name in 2015 and used it to replace a broken air conditioner. Hailee said she didn’t discover the account until Wells Fargo began pestering her about late payments.

“I wasn’t making that much money,” said Hailee, who asked to be identified by her first name only. “If [my mom] had just asked me in the first place, I would’ve seen if there was anything I could do to help out. Instead, I find out one day that I’m $500 in debt.”

Hilary O’Byrne, a Wells Fargo spokesperson, told BuzzFeed News it could not comment on Hailee’s account, but it has “extensive security measures to protect customers from fraudulent activity.” But it doesn’t discuss security procedures in detail, “as doing so could jeopardize their effectiveness.”

Hailee said she feels betrayed by her mother’s actions, but she’s not going to file charges. “I would never send my mom to jail or put her in a situation where she has to go to court,” she said. “It’s hard in these times to remember your parents love you and it sucks you’re being taken advantage of.”

This form of identity theft is not always malicious, Chi Chi Wu, an attorney with the National Consumer Law Center, told BuzzFeed News. “A lot of times parents are desperate,” she said. “The heat has been shut off, the light has been shut off. You can’t get service with your own information, so they use a child’s identity to get service.”

Krebs at the FTC said this kind of fraud “may be different from running up a bunch of credit card bills, but is the impact the same? Yes.”

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Police: Mother, daughter bought 3 new cars using stolen identity

WINTER HAVEN (FOX 13) – A woman and her adult daughter were arrested for identity fraud after police say they bought three brand new Honda vehicles using someone else’s information.

The sales manager at Winter Haven Honda called police after a credit monitoring company raised concern that the purchases were fraudulent.

Winter Haven Police say Norma Castro, 48, and her daughter, Keisha Nicole Garcia-Castro, 23, came to the dealership to buy vehicles to use while driving for Uber.

Police say both women provided identification and Nicole filled out the credit application to purchase a 2018 Honda Accord and a 2017 Honda Pilot. The vehicles have a combined value of more than $100,000.

The dealership contacted the women a few days later to follow up on the purchase. Norma told the associate she was so happy, she planned to buy another vehicle. Police say the pair came back a few days later and purchased a 2018 Honda Accord, valued at $43,000.

But two days later, on Monday, January 29, the dealership got a call from a credit monitoring company which said the information entered on Nicole’s credit application had been flagged for identity theft.

That’s when the dealership called police about the fraud and let officers know Norma was scheduled to come to the dealership later that day.

When she arrived, Winter Haven police were there waiting for her.

Police say Norma told police where they could find the first two vehicles, which were towed back to Winter Haven Honda, but Nicole was nowhere to be found.

The Honda that Norma drove to the dealership was also returned.

Norma told police she was unaware of what was on the credit application filled out by her daughter. In her purse, police say they found bills and documents with the names, birth dates, and social security numbers of people unknown to Norma. Police say she ultimately confessed and said she was trying to protect her daughter.

Norma was booked into the Polk County Jail on one count of conspiracy to commit fraud and three counts of possession of another person’s ID without consent.

A warrant for Keisha Nicole Garcia-Castro was obtained on charges of grand theft of $100,000 or more and obtaining property by fraud more than $50,000.

Police say Nicole was already serving five years probation for a fraud charge in April 2016.

Anyone with information on Garcia-Castro’s whereabouts is asked to call Heartland Crime Stoppers at 1-800-226-TIPS (8477). Callers are guaranteed anonymity and could be eligible for a cash reward.

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One prison sentence wasn’t enough for this former Kentucky lawmaker

A former Eastern Kentucky lawmaker pleaded guilty to identity theft Thursday under a plea deal that calls for a two-year prison sentence.

Former state Rep. Keith Hall, a democrat from Pikeville who is already serving a 7-year sentence in another case, was charged last year with three counts of wire fraud, two counts of identity theft and one count of lying to the FBI.

Under his deal with prosecutors, Hall pleaded guilty to one count of identity theft. In turn, they will recommend a 2-year prison sentence, a maximum fine of $250,000 and no more than one year of supervised release.

The other five charges, the most serious of which could have carried a 20-year sentence, would be dismissed.

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Hall is currently serving a 7-year sentence following a 2015 conviction for bribing a state inspector to overlook violations at his surface coal mines.

The new case involves a Pike County company called S&H Chemical Co. LLC, which supplied chemicals and water-treatment products to coal companies. The company’s owners were listed in the indictment as S.H. and J.H., with J.H. identified as Hall’s son.

Hall owned coal companies that operated in conjunction with S&H Chemical, and Hall “generally oversaw” the operation of S&H, the indictment said.

B&W Resources, a London mining company that bought chemicals from S&H, required vendors to show proof that they had valid liability and workers compensation insurance, the indictment said.

When B&W requested proof of insurance from S&H in April 2015, Hall cooked up a scheme to fool the company by submitting falsified documents, according to the indictment.

Hall allegedly gave B&W at least four fake certificates showing that S&H had insurance.

Hall was a state lawmaker for 14 years before being defeated for re-election in 2014.

He was indicted in federal court that year for allegedly funneling $46,000 to Kelly Shortridge, a state surface-mine inspector, so that Shortridge would ignore or delay enforcement of environmental violations at Hall’s mines.

Hall is scheduled to be released from prison in June 2022 in that case.

Will Wright is a corps member with Report for America, an initiative of The GroundTruth Project. Reach him at 859-270-9760, @HLWright

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Haven PD: Mother & daughter schemed to fraudulently buy 3 vehicles; daughter at large

Mike Ferguson @mikewferguson

WINTER HAVEN — A Haines City woman has been arrested and another remains at large on fraud charges after trying to purchase vehicles from a car dealership under false pretenses, according to the Winter Haven Police Department.

Norma Castro, 48, and daughter Keisha Nichole Garcia-Castro, 23, each purchased vehicles from Winter Haven Honda, 6396 Cypress Gardens Blvd., on Jan. 27 — a 2018 Honda Accord and a 2017 Honda Pilot, police said. The combined value of the two vehicles was greater than $100,000.

The women, according to police, told the dealership that they were purchasing the vehicles for their Uber business. A credit application completed by Garcia-Castro returned as satisfactory, allowing the two women to leave with the cars, police said. Castro told the dealership in a later phone call that the two had planned to buy a third vehicle. They returned to the dealership at 5:30 p.m. Jan. 27 to pick up a second 2018 Honda Accord — this one valued at $42,958.

“All indications are they falsified the driver’s licenses,” police spokeswoman Jamie Brown said. “They falsified other people’s licenses to have their names on them.”

On Monday, the dealership was contacted by LifeLock, an identity theft protection firm, which advised the dealership that the information entered by Garcia-Castro had been flagged for identity theft. When Castro came in for a scheduled appointment Monday, police had already been contacted and were present at the dealership to apprehend her.

“The initial application, I’m told, was filled out by hand,” Brown said. “That may be why it would have taken LifeLock a few days to enter the information.”

The police report said Castro acknowledged to police that the two vehicles were at their Haines City home at 717 Garnette Ave., from where they were later towed and returned to Winter Haven Honda. A Honda that Castro drove to the dealership was also returned.

Castro told police that she had her daughter fill out the credit application, but she did not know what was on it. A search of Castro’s purse, police said, returned a cable bill in Garcia-Castro’s name along with other documents with names, birthdates and Social Security numbers. Castro told police that the documents belonged to family members, but she was unable to remember any of the names on the documents, the WHPD said.

Castro later said that she was holding the paperwork for her daughter, who told Castro the paperwork belonged to her friends, police said. Castro told police that she initially lied to protect her daughter.

Castro was taken to the Polk County Jail on charges of conspiracy to commit theft and three counts of possession of identification without consent. Garcia-Castro is wanted on charges of grand theft of more than $100,000 and obtaining property by fraud. Garcia-Castro is on probation for a fraud charge from April 2016.

Anyone with information on Garcia-Castro’s location is asked to call Heartland Crime Stoppers at 800-226-8477 (TIPS). Callers will remain anonymous and may be eligible for a cash reward.

Mike Ferguson can be reached at Mike.Ferguson@theledger.com or 863-401-6981. Follow Mike on Twitter @MikeWFerguson.

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ID theft, fraud prevention topic of free seminar

Attendees will learn how to be their own best defense against becoming a victim of scams, fraud and identity theft. Topics covered will include protecting yourself in a data breach, scams hitting the local area, health-care scams and fraud, how to recognize scams and fraud by mail, phone and email and what to do if you are ever a victim.

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Residents should be aware of tax-related identity theft

Tax season officially kicked off this week with the IRS accepting returns from filers.

Plenty of time remains for those procrastinators who prefer to file when the deadline rolls around — April 17 marks that date this year. But with the Equifax hack and similar opportunities for thieves to access the personal information of millions, it may pay off to file early to safeguard any refund that might be due.

Tax-related identity theft occurs when a person’s Social Security number is used by someone else for the purpose of claiming a refund to which they have no rights. Victims often discover the fraud after they receive a notice from the IRS that states their Social Security number was used on more than one tax return filed in a single year or the agency’s records show there was income from an unknown employer.

The Federal Trade Commission this week reported some encouraging news on that front. The number of tax-related identity theft complaints filed in 2017 made up 22 percent of 371,157 identity-theft complaints, down from 33 percent of the 399,223 complaints filed the previous year.

The agency also reported a decline in the number of scam artists who call taxpayers and threaten them with arrest or large fines unless an immediate payment is made. The 56,065 complaints involving these so-called IRS impostors in 2017 represent a 54 percent decline from the previous year.

“We’ll have to wait to see if the declines turn into long-term trends,” said Seena Gressin, an FTC Consumer and Business Education Division lawyer, while promoting a public awareness campaign intended to combat these crimes. “In the meantime, you can be sure of this: The more you know about tax-related identity theft and IRS imposter scams, the better your chance of avoiding them.”

While the prevalence of tax-related identity theft appears to be waning, the Internal Revenue Service warns “taxpayers to remain vigilant to scams as they continue to be reported around the country.” Thieves often target those who are impacted by disaster — natural or otherwise — and vulnerable populations.

“These scams evolve over time and adjust to reflect events in the news, but they all typically are variations on a familiar theme,” IRS Commissioner John Koskinen states in a media release addressing the topic. “Recognizing these schemes and taking some simple steps can protect taxpayers against these con artists.”

In an effort to combat this crime, the IRS offers tips for taxpayers, tax professionals and businesses:

• Taxpayers are urged to use security software with firewall and anti-virus protections, keep it turned on, and set it to update automatically. Sensitive files stored on computers should be encrypted, and a unique password created for each account.

• Taxpayers should familiarize themselves — and learn to recognize and avoid — phishing emails, threatening calls and text messages sent by thieves posing as legitimate organizations. Do not click on links or attachments in suspicious email messages or those from unknown senders.

• Taxpayers should protect personal data — treat it like cash, and don’t leave it lying around.

• Tax professionals are encouraged to review security features and exercise due diligence while protecting client data.

• Businesses and other organizations are urged to combat identity theft by helping educate employees — especially payroll and human resources workers — clients and customers.

• Businesses that retain sensitive financial data also should review and update security plans.

Reach D.E. Smoot at (918) 684-2901, @dsmootMPhx or dsmoot@muskogeephoenix.com.

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