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Mifid II set to change the way buyside firms access and pay for research 

January 5, 2016

James Williams, HedgeWeek

The nature of how research is disseminated and accessed within the funds industry is changing. In some respects, sellside institutions are adopting a Good Cop Bad Cop stance. On the one hand, they are starting to scale back the value of the research they send out to smaller clients. On the other hand, they are committed to providing best execution prices to those same clients. 

One of the primary drivers behind this scaling back, which is known as ‘ghosting’, is that under Mifid II, sellside institutions will be required to disentangle research from trade commissions and as such place greater focus on the value of research being produced. Buy-side institutions will need to set research budgets and separate research from trading activities; something that has long been in place, with sellside research teams flooding the market with daily reports in a bid to encourage clients to trade.

Speaking to Hedgeweek, one source familiar with the situation who asked not to be identified said that whilst high value clients are still receiving substantial research reports, lower value clients are starting to only receive 1- and 2-page reports as the tap gets steadily turned off. Read more

 

 
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