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06 October 2017

Financial Times: MiFID II causes brisk research market to spring up


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The MiFID II rules, which come into force in January will, among other things, require fund managers to pay investment banks and brokers directly for analyst research, instead of combining the cost with trading commission. In some cases, they will also have to justify this cost to investors.


Ahead of the new rules, more than a dozen online research marketplaces, including Alpha Exchange, RSRCHXchange and Electronic Research Interchange, have sprung up. These gather research in one place for users to buy, with some saying they will take a commission. Typically started by former bankers and fund managers, they have zippy user interfaces and the promise of Netflix-style personalised suggestions. But these newcomers are aware they face a mighty challenge — in the shape of big data and research aggregators such as Bloomberg and Thomson Reuters, which provide dedicated terminals for asset managers and banks around the world and have decades-long relationships and deep pockets.

The incumbents such as Bloomberg, Thomson Reuters, Factset and S&P Capital IQ plan to use their longstanding experience in aggregating research to continue distributing to their hundreds of asset manager customers. Bloomberg has introduced new functionality allowing asset managers to track interactions — such as face-to-face meetings — with analysts. This year, Thomson Reuters will enable fund managers to rank analysts’ work for the first time on its Eikon terminal. It is also working on an initiative to allow managers to buy “research collections” — for example a sector package. “We will see a number of innovations and business models in the year ahead,” said Mahesh Narayan, head of research and portfolio management at Thomson Reuters. “We are observing them, working out who we need to partner with and doing some innovation on our own side.”

Full article on Financial Times (subscription required)



© Financial Times


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