Asset managers must show the top five brokers they have used for trading over a calendar year, for each class of financial instrument. They must also show they are getting the best prices on their share, bond and derivative deals. Brokers must show the venues they used to execute the trades. The first reports will reflect 2017 activity. The transparency, likely to delight some brokers and annoy others, is one of the more public examples of radical new European rules designed to restore consumers’ faith in markets after the financial crisis. Among the biggest changes under the Mifid II regime, brokers can no longer “bundle” investment research with the fee they charge asset managers for executing trades. “The information is commercially very interesting because it will enable the market to see which brokers are being used by which asset managers,” says Nick Bayley, a former regulator and a managing director at Duff & Phelps, a corporate finance adviser.
Many executives are sceptical of the value of the reports, as the data are not standardised nor sufficiently detailed to be useful to brokers. European regulators have also acknowledged that many institutions may not be able to fully report their data. The market would still rely on brokers for in-depth information, he said. Nevertheless, brokers are trying to boost their market shares in Europe as fund managers adjust to the new Mifid regime.
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