Just over 40 percent of investors have noticed a reduction in the availability and breadth of research for small and mid-cap companies since the introduction of Mifid II, according to a survey by the International Capital Market Association (Icma), the Zurich-based trade body.
This trend is likely to continue as Mifid II feeds further into the system, warns Icma’s Asset Management and Investors Council (Amic), which carried out the survey for the second year.
More than two thirds (68 percent) of respondents say they used less research in general compared with last year. Banks and brokers took the biggest hit, with 71 percent of those surveyed saying they used less research from providers, and 82 percent saying they used fewer research providers.
But the survey suggests that fears about a decline in the quality of research is so far largely unfounded. The vast majority of respondents say they have not noticed any change in the quality of the research they have received, compared with 32 percent last year saying they expected research quality to get worse.
No respondents find a change in the quality of research from independent providers.
This year Amic finds that buy-side firms are split between unbundling research globally and only using paid-for research (35 percent), and segregating EU and non-EU businesses (35 percent). Last year 64 percent of respondents were planning to unbundle globally and only 7 percent were planning to segregate businesses.
‘The significant change in company attitude to the business segregation model may reflect that the costs and complexities of segregating their business geographically outweigh the costs and complexities that come from unbundling globally,’ says Amic in a statement.
Amic surveyed primarily asset managers and investment funds from EU countries.