IMA calls for conference alternative solution ESMA

The IMA has said it intends to hold a conference to establish an alternative model countering the proposal set out by the European Securities and Markets Authority (ESMA) on restricting the use of dealing commissions to pay for investment research.

IMA calls for conference alternative solution ESMA


The IMA’s chief executive Daniel Godfrey said the association intends to host a conference for global regulators, investment managers and the sell-side providers of investment research to kickstart the process to finding an alternative solution to the issue.  

ESMA’s proposal, which would be implemented in January 2017, sets out to clamp a limit on the receipt of commissions. The type of research investment managers can pay for with dealing commissions would thus be significantly altered. 

The FCA has said that a total unbundling of research from dealing commissions would be the most effective way “to address the continued impact of the conflicts of interest created for investment managers by the use of a transaction cost to fund external research”.  

“The IMA does not support ESMA’s proposals,” Godfrey said.

“Research associated with the use of dealing commissions is not an inducement.  Rather, it raises conflicts of interest, which need to be managed.” 

He maintained that the focus of the consultation should be on getting suppliers of research to unbundle the costs.

This way asset managers can place a value on the research being supplied and to what they are paying. Any conflict raised by the consultation could be dealt through commission sharing arrangements. 

Godfrey added that unilateral change in Europe or the UK would create regulatory arbitrage that would put the UK investment management industry at a competitive disadvantage and the IMA could not support this. 

Furthermore, he said that ESMA’s proposals would create a muddled regime with never-ending debate about what was allowed and what was not. 

However, Godfrey said “it may be possible to establish an alternative model” and confirmed the IMA’s intention to host a conference to address this.

He referred back to the IMA’s paper from February earlier this year – entitled “The use of dealing commission for the purchase of investment research”- which made recommendations to help investment managers reduce research costs and improve procurement practices.  

“The evaluation process must consider the impact that any new model might have on investors and equity market users,” Godfrey said.

“If these issues can be addressed and it was determined that a new, global model for the purchase of research would bring material overall benefits for clients, the IMA would support it,” he added.

In May, ESMA began the consultation process, marking the first step in the translation of the directive into implementable rules and regulations. The process looks at how best to implement the revised Markets in Financial Instruments Directive (MiFID II).



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