Asset Managers Say MiFID Research Unbundling Will Expand to US and Asia

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Asset Managers Say MiFID Research Unbundling Will Expand to US and Asia

A poll of 418 asset managers reveals that five months the MiFID II implementation, 78 percent of European respondents still view the law’s research unbundling requirement as bad for brokers, indicating that some improvements need to be done.

RSRCHXchange, an online aggregator and research firm, today revealed headlines from the results of their latest survey analyzing the satisfaction of asset managers over the MiFID II research unbundling rules which came into effect in January 2018.

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The results show that more than eight out of ten institutional asset managers in the US expect to be compliant with the MiFID II rules within the next four years, while half of the respondents in Asia expect it to take effect within two years.

The survey also found that the vast majority of asset managers are leaving the timing of MiFID II compliance until they receive guidance from their national regulator with regard to the rules.

The survey was conducted in Q2 2018 and follows similar two polls carried out in 2016 and 2017. However, the latest survey was the largest of its kind, according to RSRCHXchange, polling over 350 firms with over $30 trillion of AUM in aggregate.

At the same time, the survey shows that setting and assessing research budgets are still seen as a major challenge. The process is being held back by low research pricing, the survey revealed, with 75% of respondents agree that the current low prices for research are not sustainable.

In Q2 2018, just over 45 percent of respondents from the smallest asset management companies feel worse off as a result of reduced research access, much more than their peers at the largest firms.

Additional findings in this segment also show that 82% believing impact of research unbundling would result in reduced coverage for small and midcap stocks.

Jeremy Davies, Co-Founder of RSRCHXchange, said: “In our third survey, we wanted to explore the globalisation of unbundling, especially now that it is live in Europe. With over 80% of US respondents expecting unbundling to impact their local market within four years, unbundling will be trending for years to come. As it stands today, more than 100 of our client firms are based in the US and so are more than 20% of the 350+ research providers using our RSRCHX platform. “

Vicky Sanders, Co-Founder of RSRCHXchange, added:  “Our survey was conducted just months after MiFID II came into effect, the biggest change to the research space in decades. It’s clear that its impact has already been felt in this short time but that there is more the industry needs to do to adhere to the rules and adapt to these changes. If the current price of research is not sustainable, what will happen next to help the industry find equilibrium? It’s interesting to see that market forces are supported by asset managers as the solution for other outcomes, such as the reduction in the coverage of small and midcap companies.”

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