The head of debt and risk solutions and head of markets sales and distribution told Bloomberg that high net worth customers are not getting the best investment choices due to the regulatory changes.

High net worth customers may be losing access to the best investment offers because of the demands of the revised European market regulation, MiFID II, according to the head of debt and market sales at Nordea Bank.

MiFID II is one of the largest regulatory changes to have affected EU financial markets in decades. It is designed, its framers say, to give investors more data and clarity about what they pay, and reduce conflicts of interest of the kind that were exposed by the 2008 financial crisis. Critics have said that the regulations are excessive and add costs that will squeeze out marginal players and raise barriers to entry.

Philip Asp, head of debt and risk solutions, and Henrik Kall, head of markets sales and distribution at Nordea, told Bloomberg that MiFID II distinguishes between retail and professional investors in a way that does not necessarily reflect how sophisticated a client is.

If someone is categorized as a retail investor, he or she might not be granted the same access to complex investment products despite having the relevant expertise, the bankers said.

“The thresholds become a bit arbitrary,” Asp said.

To be sure, retail investors can still access complex vehicles, but it requires a good deal more work on the part of advisors to document that they have taken all the necessary precautions to protect clients.

The Nordea bankers say the upshot has been that sophisticated, high net worth retail investors are losing out because investment firms do not necessarily want to burden themselves with the extra paperwork.

“If you look at primary order books, today you have fewer lines, i.e. fewer investors, than you’ve had before because there’s a sub-segment of the market today that is unlikely to be able to play, because it’s decided by the issuer, probably in consultation with the arranger, not to facilitate that segment of investors,” Asp said.

According to Kall, high net worth clients have effectively “been locked out of that market.”

Recently, this publication reported that investments research provider Nucleus195 wants to have about 150 content providers in its shop window by the end of 2018, filling a yawning gap caused by traditional sell-side analysis being hit by red tape.