Washington, D.C., July 5, 2023 – SIFMA today issued the following statement from president and CEO Kenneth E. Bentsen, Jr. on the Securities and Exchange Commission’s (SEC) refusal to extend the relief provided in its 2019 Markets in Financial Instruments Directive II (MiFID II) No-Action Letter (NAL):
“SIFMA is disappointed with the Securities and Exchange Commission’s (SEC) refusal to extend the relief provided in its 2019 Markets in Financial Instruments Directive II (MiFID II) No-Action Letter (NAL). This lack of action negatively impacts the competitiveness of U.S. markets and research providers, and poses a significant risk that impacted buyside managers will lose access to important research services. The relief has been critical to addressing the conflicts of law problem that arises between the current MiFID II requirement for investment managers to make separate, unbundled payments for research and the application of the Investment Advisers Act to any U.S. broker-dealer that accepts such separate, unbundled payments for research. Despite best efforts, the industry has not found a viable solution that works for all U.S. broker-dealers that addresses the conflicts of law problem presented by MiFID II in the U.S.
“By failing to extend the NAL, the SEC is now allowing a European requirement that conflicts with U.S. law to directly affect U.S. broker-dealers, even though the European requirement is in the process of being dramatically revised. Importantly, the SEC is also ignoring multiple bipartisan Congressional requests to extend the NAL and conduct a study to evaluate the potential impacts on markets and investors of the letter’s expiration. We continue to believe SEC should take steps to extend the relief provided in the NAL. Such a step would preserve the breadth and depth of research that broker-dealers provide, including research about smaller issuers seeking to raise capital, which is vital to maintaining the competitiveness and efficiency of the U.S. capital markets and promoting informed investment decisions by institutional investors.”
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SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA).
