Last week, global financial markets reacted negatively to Coronavirus/Covid-19 outbreaks in China and other parts of the world. Falls in financial markets have led to some client portfolios losing value, depending on the make-up of the portfolio.
Some portfolios have fallen by over 10% which triggers the MiFID II requirement in COBS 16A.4.3 for portfolio managers to notify investors of the losses sustained.
A firm which provides a discretionary investment management (DIM) service is required to inform a client where the overall value of their portfolio, as evaluated at the beginning of each reporting period, depreciates by 10%, and further multiples of 10%. This must be done no later than the end of the business day in which the threshold is exceeded or, in a case where the threshold is exceeded on a non-business day, the close of the next business day.