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Mifid Research Agreement

Following the miFID II reforms, the ACF will continue to monitor both the impact on competition and the coverage of SME research, analysing market data and other audits, such as the forth future European Commission study. As with any regulation, different implementation approaches have been put in place. Here, big banks, asset managers and independent research providers show how to manage the new rules. There have been a number of asset managers who have recently decided to pay for their own research on their own resources, that is, on a hard dollar basis. There are a number of benefits to pay for research on a company`s own resources: meetings are much more expensive, but considering that a survey at the end of 2017 estimates the cost of research at about $10 million for $10 billion of equity, these prices are surprisingly low. Read more: Investors question the rules of research after the IPO, Mifid II We think there may be some reasons why a company decides to pay for the research itself: detailed knowledge on the approaches of asset managers to evaluate the research and expectations of the FCA on how certain activities , such as business events, research marketing and consensus forecasts, interact with the new rules you will find in the multi-firm review report. Article 24 of Mifid II requires asset managers to explicitly separate commissions such as research and enforcement into their constituent elements. The accounting method is based on the fact that the asset manager has agreed with each of his clients on a specific research fee. In this approach, the requirement to obtain a clear agreement with each client is greater than the transaction method, as the accounting method introduces a new ability to collect fees, i.e.

by withdrawing them directly from customers` money. The asset manager would then negotiate with any execution broker at a rhekut rate only. All of this was known in advance and, honestly, the effects may not have been as dramatic as some had predicted. However, while other elements of Mifid II are seen as suddenly technical changes, with few greater impacts, the dissociation of research is more fundamental and long-term, with the actual effects evolving in the years to come. Absorbing the cost of searching in your own LP quickly proved to be the preferred option towards the end of 2017, for reasons of both reputation and simplicity.