MiFID II’s unbundling requirements have greatly impacted the investment research business. The heightened focus on the quantified value of research has had – and will continue to have – far reaching effects for both the buy side and the sell side.
In 2017, leading up to the MiFID II effective date of January 3, 2018, investment managers were focused on figuring out the best ways to manage every aspect of the investment research workflow, from tracking and consumption, to valuation and payment. Research providers were focused on providing greater value to their clients through the research they produce.
To better understand sentiment during this year of preparation, Institutional Investor, Substantive Research and Visible Alpha conducted a survey to see how asset managers and asset owners were thinking about MiFID II. Overall, the theme that emerged among asset managers was one of indecision and uneasiness. Other trends included:
- A shift to absorbing research costs through P&L
- A systematic approach to valuing research was expected to yield greater results
- Uncertainty around research access and inducement management
Since the regulations went into effect, firms are continuing to learn the full impact of the regulation and determining the best ways to manage investment research and maintain compliance. Three months into the implementation of MiFID II, Visible Alpha conducted a follow-up survey to asset managers to see if and how sentiment has changed, as well as determine any benefits that arose or challenges that remain. A few interesting themes emerged:
- Internal qualitative feedback is an important input into the research valuation process
- More firms are mandating a single platform as a venue to consume research
- There is greater interest in email tracking technology to protect against inducements
Check out the full survey results here. It’s important to note that it’s likely we will continue to see changes and best practices emerging throughout the year, as we all learn the full extent of MiFID II’s impact on the industry.