Some fund managers have been charged recently for receiving unsolicited voicemails from bank analysts — who this year have found themselves desperately trying to fulfil quotas for the number of interactions they have with clients. The move has been spurred by tougher EU markets rules known as Mifid II, which require fund managers to pay for analyst research and insights separately to trading fees. The change, introduced in January, was designed to curb inducements and conflicts of interest — many banks and brokers historically provided research for free as a way to lure fund managers to trade with them. But in its maiden year, so-called “research unbundling” has put an uncomfortable strain on individual relationships between analysts and fund managers, forcing both sides to track meetings, calls, emails and even instant messaging chats. Brokers are under pressure to bring in valuable engagement, while asset managers fear receiving anything they might have to pay for.
The changes to research distribution are among the most conspicuous, having already thrown up several unintended consequences. Firstly, most fund managers decided to bear the cost of research on their own books instead of passing it on to investors, as regulators had assumed they would. Meanwhile, a number of big investment banks such as JPMorgan opted to slash the prices they charged for analyst research in an attempt to guard market share. Now, banks and asset managers are undergoing a round of end-of-year discussions about research pricing — and making tough judgments on the new product.
Some EU regulators — including the chairman of France’s Autorité des Marchés Financiers — have called for a rethink of Mifid II unbundling, raising the possibility that the UK maintains stricter rules than the continent in future. But others hope the rules will eventually be launched globally, including in the US.
Full article on Financial Times (subscription required)
© Financial Times
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article