Some 38% also admitted they are ‘not ready’ to make such changes yet, with implementation less than a year away.
In research conducted by the Electronic Research Interchange (ERIC), managers said they expected relationships would be “deeply affected” by new regulations which could see a reduction in investment bank research and a need to boost to internal research teams, with 74% saying they will apply greater scrutiny to where research comes from.
The refreshed regulations due to take effect from January 2018 aim to increase transparency and unbundle research fees from trade execution fees.
Chris Turnbull, co-founder of ERIC, says: “MiFID II will significantly change the investment industry but the consumption of quality research will remain a critically important element of the investment process.
“Our findings show that asset managers expect that relationships across the industry will be deeply affected under the new regulatory regime. While we believe that investment banks will continue to play a critical role in the provision of quality research, it is clear than both the buy and sell side must adapt to new research procurement and distribution strategies in order to avoid getting caught out in January 2018 and continue serving the best interests of the end investor.“
“MiFID II has kick-started a drive for transparency that will recognise the value of high quality research, but there is still significant work to be done to meet regulatory obligations and ensure the investment research market functions effectively in an unbundled world.”
A further 57% highlighted the rise of alternative research distribution platforms as the answer to any decline in the research ‘sell-side’.
However, those buying research are on the whole against the idea of spending more on research with a quarter believing spending will increase and the three-quarters of respondents predicting spending will either fall or remain the same.
