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FCA probe to explore Mifid II impact on research

UK regulator to examine regulatory impact as current research pricing viewed as unsustainable by investors.

The UK’s Financial Conduct Authority (FCA) has launched a review into the application of Mifid II regulations and the unbundling of research costs.

It plans to write to asset managers, investment banks, specialist brokers and independent providers to ask for details about research pricing models, governance and decision-making related to research provision and pricing methodologies.

The review is expected to last six months.

The news comes nearly six months after Mifid II came into effect. The impact on the market is as yet quite unclear, but RSRCHXchange’s latest buy-side survey sheds some light on investor attitudes to the changes.

These are broadly that it is positive for end-investors, negative for research providers and mixed for asset managers.

Seventy-eight per cent of respondents within Europe thought unbundling was bad for brokers, where as 53% felt it was a good thing for investors.

The firm canvassed the views of 418 respondents from more than 30 countries, representing over 350 firms with more than $30 trillion of AUM in aggregate.

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Jeremy Davies,
RSRCHXchange

“I don’t think that the number of research providers has fallen as much as people expected it to,” Jeremy Davies, co-founder of RSRCHXchange, tells Euromoney.