The EU's revised Markets in Financial Instruments Directive, or MiFID II, which is set to come into force in January 2018, could help expedite the use of secondary trading platforms by real estate investors, IPE Real Assets reported, citing Melville Rodrigues, partner at CMS Funds Group.
MiFID II has implications for the sale and purchase of stakes in unlisted funds, including real estate, and should compel intermediaries to contemplate secondary-trading platforms — a move that Rodrigues said "raises the best execution bar," since the intermediaries may otherwise face the risk of not fulfilling best execution practices.
Rodrigues also noted that intermediaries will be required to show that they have taken "all sufficient steps" under the new rules, rather than "all reasonable steps," meaning they must consider alternative sale or purchase options.
"If the fund units are tradeable on platforms, there may be the prospects of achieving a better result via this secondary market," Rodrigues added.
According to Rodrigues, buyer representatives may also have to look at talking with the fund manager to subscribe for new units, in addition to the conventional process where seller representatives talk to the fund manager and study redemption and secondary trade exits.
