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Dec 12, 2018

Mifid II going global, says research

IR Magazine anticipated trend for European regulation to become global standard

Mifid II rules on the funding of investment research are changing behavior on a global scale, according to new research. It’s a development that has huge implications for fund houses, banks, brokers and investors globally – and a trend anticipated by IR Magazine more than a year ago.

The research – by Liquidnet, a global institutional investment network – reveals that a majority of asset managers are implementing the European rules on research procurement across their worldwide operations, not just in Europe, in response to Mifid II and investor demand.

The research states that 53 percent of asset managers had already implemented European research unbundling standards as a global policy. A further 20 percent planned to do so within five years. Such a trend will make Mifid II a global standard of operation in no time.

Rebecca Healey, head of EMEA market structure and strategy at Liquidnet, says in a statement: ‘Research unbundling is going global. It is being led by investor demand as well as the practicalities of implementing regulatory policy across different jurisdictions.’

US asset managers AllianceBernstein and MFS and UK-based Baillie Gifford have all implemented research unbundling globally. Others have tried to limit research unbundling to European operations, waiting to see any changes made by regulators outside Europe and by competitors in the US and Asia, notes the research.

This is despite the fact that within Europe Mifid II has not always been seen to be implemented uniformly. Healey notes, however, that she expects the European Securities and Markets Authority, the EU financial regulator, to push for consistent application.

Additionally, France’s securities regulator, the Autorité des marchés financiers, recently called for a review of Mifid II due to concerns that research coverage of smaller and mid-sized companies would suffer – a stance that has been dismissed by many Mifid II experts.

Almost half the managers surveyed by Liquidnet said research coverage of small and mid-sized companies had been affected.