Mifid II, European market rules introduced two years ago, are having a significant impact on fund managers’ use of investment research around the world
More than two-thirds of investment groups have rolled out changes to their approach to paying for research globally, despite the rules covering just the EU, according to estimates. But commentators have warned of large disparities in research budgets between those fund managers paying for it themselves and those passing on the costs to their clients — with the differences exacerbated by the coronavirus crisis.
“It’s a tale of two cities,” said Neil Scarth, principal at Frost Consulting, which monitors research use. “The likely impact of the Covid-19 pandemic is going to be huge — do you really want your investment managers to have less research?”
The wide-ranging Mifid II regime was introduced to great fanfare in 2018, in what was heralded as one of the biggest shake-ups to investing and trading for decades. Most European fund managers responded by announcing they would pay for research themselves, rather than pass on the costs to clients, although few said they would roll it out globally.
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