Under MiFID II, which came into effect at the start of the year, asset managers now must pay for analysts’ research and advice separately from executing trades with banks and brokers. This major shake-up has forced asset managers to reassess the research they consume and prompted frantic negotiations over how much they pay for it. However, the rules also gave fund managers some slack to put off making decisions until the end of the first quarter. Many paid a nominal upfront fee at the start of the year to continue receiving written research reports, but are now receiving bills for all their other interactions with analysts — such as phone calls and meetings — during the quarter. Others used an exemption in the rules to sign up to receive free research for three months. These trial periods are now coming to an end.
Several analysts at large investment banks said some fund managers had avoided taking calls with analysts because charges would be triggered. One warned that it had now become impossible to speak to prospective clients if there was no research agreement in place.
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