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MiFID II research rules to add fiduciary layer for asset owners 

October 17, 2016

Rick Baert, Pensions & Investments

Pension fund executives will have another fiduciary responsibility starting as early as next year, courtesy of the European Commission.

New EC rules will require money managers with European operations, clients or investment strategies to disclose, in advance, a detailed budget of research charges that have historically been bundled with execution costs under what's known as soft dollars. Pension fund executives can either accept or reject those charges from their money managers.

And therein lies the new fiduciary responsibility, sources said.

Overall asset owner costs for research are expected to fall by 15% under the new Markets in Financial Instruments Directive II rules, according to a report from London-based Frost Consulting Ltd., which advises pension funds and managers on market structure changes.

That's because asset owners under MiFID II will pay only for research they specifically need for their investments, said Steven Glass, president and CEO of Zeno Consulting Group LLC. Read more

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