Mifid II unbundling to go global

The US and Asia could be subject to similar research unbundling rules as Europe under Mifid II by 2022, a survey by a research platform provider has shown.

A report published by Rsrchxchange shows a consensus view among financial services professionals that unbundling is going global.

Polling company Survation surveyed 418 respondents in Q2 2018, representing 350 firms with more than $30trn of assets under management across 30 countries.

Roughly 83% of respondents think research unbundling requirements like those under Mifid II will be fully implemented stateside by 2022.

More than half of respondents believe research unbundling will catch on in Asia even sooner, coming into effect within the next two years.

Mifid II regulation, which came into effect in January this year, has forced European and UK asset managers to decide whether they want to fund research themselves or pass the cost onto investors.

Fund groups overwhelmingly decided to bear the cost of research themselves, with a few exceptions.

But the regulation has posed problems for UK and European managers who have previously relied on research from non-EU brokers, investment banks and other research providers.

Last year the Securities and Exchange Commission and European Commission had to introduce an emergency “no action relief” to allow American brokers a 30-month cushion after Mifid II came into effect to prevent fund groups from losing access to valuable US research.

Mifid resentment

Months after Mifid II has come into effect, attitudes toward unbundling are generally negative, according to the same Rsrchxchange survey.

Research providers are thought to have the worst end of the deal, with 78% respondents saying unbundling is bad for brokers.

But more than half of respondents admitted that the new rules were probably more beneficial for the end investor.

Respondents said the impact on asset managers has been mixed.

However, the report revealed that managers have already cut back on their research consumption with 63% of those polled saying they are taking fewer meetings with sell-side analysts.

And 43% of analysts and fund managers feel worse off as a result of reduced access to research.

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