Issue - meetings

(a)       That the draft Treasury Management Mid-Year Report 2017/18 be recommended to Cabinet on 19/12/17; and

(b)       That the Committee recommends to Cabinet that the Council elects to ‘opt up’ to professional client status by regulated financial services firms as a result of the second Markets in Financial Instruments Directive (MiFID II) as explained in paragraphs 1.09-1.15.

The Finance Manager - Technical Accountancy presented the draft Treasury Management mid-year report for 2017/18 prior to consideration by Cabinet.  An update on Quarter 2 was shared for information.

The Finance Manager explained the complex regulatory changes of the second Markets in Financial Instruments Directive (MiFID II) which came into effect from January 2018.  This required councils to be categorised by regulated financial services firms as retail clients unless they chose to ‘opt up’ to become professional clients, subject to meeting criteria.  Having assessed both options, the officer recommendation was for the Council to maintain its current professional status due to the limited benefits available to retail clients and possible higher transaction costs.  The status would be reviewed regularly to ensure it met the Council’s needs.

The update on Quarter 2 set out the current position on treasury management activities and the impact of the recent rise in interest rates on the Council’s borrowing strategy.  Long-term borrowing need was being closely monitored due to the lower rates of short-term borrowing at the present time.  The Committee was reminded of the forthcoming Treasury Management training session which was open to all Members.  The report also provided information on financing the costs of borrowing including comparison with other councils, as requested at the July meeting.

Sally Ellis asked about the impact of proposed changes to the Prudential Code on the Council’s subsidiaries.  The Finance Manager advised that a revised Code had not yet been published and that any changes would be required to take effect from 2019 but were recommended for 2018/19 onwards.  It was intended that the calculations in accordance with the Code would be widened to include subsidiaries.  In the case of Flintshire, this would include the new companies which had been set up but did not apply to Aura Leisure & Libraries.  On the criteria for becoming a professional client under MiFID II, she explained that the professional qualifications and experience of the officers were considered sufficient to meet the criteria.  On a query regarding a specific loan within the debt maturity profile, assurance was given that all loans had been factored into borrowing requirements.

RESOLVED:

(a)       That the draft Treasury Management Mid-Year Report 2017/18 be recommended to Cabinet on 19/12/17; and

(b)       That the Committee recommends to Cabinet that the Council elects to ‘opt up’ to professional client status by regulated financial services firms as a result of the second Markets in Financial Instruments Directive (MiFID II) as explained in paragraphs 1.09-1.15.