MiFID II: CIPFA’s new web platform aims to ease the pain of compliance

Photo: Pixabay, CC0

Under the European Union’s MiFID II rules eligible local authorities can “elect” to be classified as “professional” investors for regulatory purposes. CIPFA’s web solution PSLink aims to make the process of electing up secure, transparent and simple. Neil Sellstrom explains the benefits.

What is Public Sector Link?

PSLink is CIPFA’s answer to the challenges of mass electing up requests between now and 3^rd January 2018. It’s an easy to use online platform for local authorities to record key data required in the electing-up process, and a means of transmitting the authenticated data securely to your financial institution (FI) relationships.

When will the platform be available?

Last week, CFOs at more than 300 registered local authorities received their activation links. CFOs are now inviting their colleagues to access their authority’s portal. This is a critical step as financial institutions need to ensure that their data is controlled by the ultimately responsible officer. Over the next few days, authorities will be able to start inputting their data into their portal.

What about FIs?

Around 40 institutions have now registered their intention to use the system and the number is growing every day, including brokers, banks, investment managers, custodians and advisors. Anyone who faces the challenge of electing up their existing and potential clients can generate enormous benefit from PSLink. We expect to have very strong coverage of FIs on the platform.

What’s the alternative?

Well, the only alternative is a manual electing-up exercise: unsecured emailing dozens of unsigned forms or using the post. This is either pulling together information for each FI’s own compliance forms, or using the Local Government Association’s (LGA) template for LGPSs. It’s important to note that the data required in PSLink is both straightforward for local authorities to complete and comprehensive enough for most (if not all) FIs to make their electing up decisions. The LGA will not be publishing a template for treasury electing-up and will be shortly directing local authorities to PSLink.

How does this compare to the LGA’s template for LGPSs?

PSLink allows LGPSs to record electing-up information in a structured format that should be straightforward to complete. It is more granular than the LGA’s template, and has been designed in consultation with FIs. Arguably, it ensures the data set is suitable for all those FIs who are happy with the LGAs template, but extends it for those who need a “bit more”. PSLink will also allow LGPSs to populate the LGA’s template online, bringing the benefits of the secure electronic transmission and certification to a template being considered by many LGPSs.

How secure is it?

The platform is built on MyDocSafe’s existing client onboarding engine. It’s governed by the Data Protection Act 1998 to ensure how the data is used. Local authorities always remain in control of their own data, and who it is shared with. Data is encrypted, and access is restricted by password to those users permissioned by each local authority’s CFO. Only those users with sending rights granted by their CFOs can transmit data using the system. In this way, local uthorities remain in control, and financial institutions accessing the data can place full reliance on its authenticity.

What are the benefits of an electronic electing-up process for Local authorities?

Firstly, they’ll only need to record their data in one form that is then transmitted to their FI relationships at the press of a button. Secondly, it’s electronically signed by either the CFO or an officer with direct delegated powers. Thirdly, it’s secure: end-to-end encryption, which is sadly missing in email traffic. Fourthly, it’s a full audit trail of your electing-up requests and discussions between you and your financial institutions. We could go on.

…and for financial institutions?

FIs could send out their own forms in the hope that local authorities will complete these quickly alongside the many other forms they need to complete. With PSLink, what more could they want? Most importantly, they’ll get data quicker and at the same time they’re reducing the burden on their clients who are otherwise facing vast quantities of form filling. Authorities may struggle to prioritise these requests, or indeed be missed. They receive comprehensive information that’s consistent, complete, accurate and certified by the CFO. It’s a full record of the audit trail behind every electing-up request. And it allows FIs to engage with new clients, electing-up in advance of the first meeting where specific products can be discussed.

What about post-electing-up?

MiFID II creates an ongoing burden on local authorities. By the nature of the rules, a local authority’s classification status could change. PSLink allows local authorities to easily re-transmit certified data to their counterparties as their position evolve, whether due to transactional activity or changes in the expertise of the team. It takes away the stress of managing many FI relationships manually, a pain for both parties.

When will electing-up requests begin?

Local authorities will be able to start recording their data over the next few days. Next week, they will be able to make their electing-up requests directly to their FIs who have signed up to the platform. Even if some of their counterparties aren’t registered to use the system, the platform will massively reduce the burden on the treasury or pension team.

How will PSLink evolve in 2018?

PSLink has been designed as a secure platform for local authorities to communicate critical and confidential information with FIs. MiFID II electing-up is the immediate problem to be solved. But it won’t end here. The platform will evolve into the meeting place of local authorities and financial institutions, a place where FIs can provide product ideas and research to authoritiess with full control over who has access. It will allow trade confirmations to be shared and electronically signed, secure instant messaging, authorised dealing lists and standard settlement instructions. Anything that is critical and confidential, and needs to be shared in a tightly controlled manner between these two parties. PSLink aims to make business easier and enhance the governance framework.

How do you register?

If you haven’t already, local authorities can register here. Financial institutions should register here. The main site has lots of additional information including example outputs. We urge both local authorities and institutions to move quickly,  time is ticking and PSLink will make a big difference to the workload over the next few months and long into the future.

Neil Sellstrom is treasury management & pensions advisor at CIPFA.