The cut-throat price war is now squeezing the margins of the specialist providers, who, unlike the banks, are reliant on revenues from research alone, EuroIRP said. Against this ultra competitive backdrop, it argues independent providers need to be offered greater flexibility around marketing their research to new clients. “The current market for research under MiFID II is not functioning effectively — this could be to the detriment of the end investor,” it said, citing rising concern among more than 60 independent research providers at a recent meeting.
Chris Deavin, EuroIRP’s chairman, also urged regulators to more explicitly lay out their stance on lowball pricing. The UK’s Financial Conduct Authority indicated at a conference earlier this year that pricing research substantially below cost or charging nominal prices could breach MiFID rules, although it has not made any formal statement on the matter. “Clarification is required in the next few months, not towards the end of the year,” Mr Deavin said. “There was always going to be some turbulence in the market but we don’t want this to become entrenched in the long term,” he added.
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