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Nov 28, 2017

UK fund managers unwilling to pay for corporate meetings post-Mifid, finds survey

Confusion also reigns across market as to how the rule will operate

UK fund managers are unwilling to pay brokers to set up corporate meetings when Mifid II rules come into force next year, according to a survey from London-based Capital Access Group (CAG).

From January, Mifid II will prevent fund managers receiving any free extra services from a broker that could be seen as an inducement to trade and could include meetings set up by a broker between a fund manager and a corporate. But CAG’s study finds that fund managers are mostly not willing to pay for this service.

It also reveals confusion across the market as to how the rule will operate, with half of the respondents to CAG’s survey unsure whether an exemption might apply in some circumstances where the broker is simply co-ordinating meetings. CAG is therefore warning that the uncertainty created by the ‘broker exemption’ may cause fund managers to be less available to companies in 2018.

Commenting on the findings in a statement accompanying the report, Scott Fulton, CAG director, says: ‘UK companies risk being shut out of the equity market by confusion around Mifid II and the so-called broker exemption. Our research shows fund managers are not clear on whether they can use stock brokers to arrange meetings without payment.

‘This uncertainty may reduce the communication between investors and UK companies. With less than 35 working days to go before the new regulations are implemented, we believe there is a pressing need for more clarity on corporate access.

‘That is why we have today posed a series of questions we believe companies should ask their advisers. We hope the answers will provide sufficient clarity for the equity market to work efficiently for companies and investors alike under the new rules.’