Bringing you news, views and analysis since 2013
Emma Cleveland, Cleveland and Co

24873

Final MiFID II regulations to hit analysts, says Cleveland & Co

RELATED TOPICS​

The final regulations of MiFID II announced today are likely to lose brokers business, analysts their jobs and also hit fund managers’ profits says Cleveland & Co Associates, the boutique legal advisory business.

Among the new regulations of MiFID II, which are due to come into effect in January 2018, is a requirement for investment banks to be more transparent about their costs. Banks and investment managers will be forced to disclose specific fees to their clients – such as fund and asset managers – for research. As it stands, banks include research costs into trading commissions that are charged to clients.
 
Emma Cleveland, Managing Director of Cleveland & Co, comments: “MiFID II is likely to hit analysts hard – it could be that research teams within banks shrink significantly.
 
“Transparency in itself is a good thing, but at what cost? Unbundling research from commission means banks increasing charges to the clients, and could ultimately result in lost business for banks.
 
“Naturally, this could force the banks to streamline their research, potentially putting analysts’ jobs at risk.
 
“If fund managers want to continue receiving valuable research from banks, they will be forced to reallocate more resources to pay for it which will hit profits.
 
“With only six months to go until the rules are enforced, asset management businesses and many more will have little time to absorb the information and put it into practice.”
 
Under the new regulations, investment managers will need to reconsider how they pay for research. They will have a range of options, including paying research costs themselves (which is difficult for smaller fund managers); setting up a research payment account, funded through fees charged to the investment firm’s clients (which will be a separate charge); or through commission sharing arrangements.

Latest News

Hedge funds posted mixed declines in October, with sharp drops in Technology and AI-related equities..
The UK is poised to become one of the world’s next generation of fintech leaders,..
Universal Investment has announced the acquisition of Cadarn Capital, a fund distribution and investor relations..

Related Articles

European investors continue to the lead the charge for sustainable investing, ploughing USD9.4 billion into funds in the third quarter of 2026...
European investors continue to the lead the charge for sustainable investing, ploughing USD9.4 billion into funds in the third quarter..
Asset managers gave a muted response to the UK Budget from Chancellor of the Exchequer John Healey this week, with one describing it as a “non-event”...
Asset managers gave a muted response to the UK Budget from Chancellor of the Exchequer John Healey this week, with..
It is tough out there for asset managers and it is about to get tougher, according to research from PwC...
It is tough out there for asset managers and it is about to get tougher, according to research from PwC...
Asset managers ever more reliant on artificial intelligence (AI) to support their investment decisions are becoming more vulnerable to weaker data that informs the technology...
Asset managers ever more reliant on artificial intelligence (AI) to support their investment decisions are becoming more vulnerable to weaker..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by