Selling US research to European managers in regulatory conflict
London — Wall Street banks may not be able to sell their US research to European asset managers because a regulatory conflict between the two regions looks unlikely to be resolved before a January deadline. A new EU directive that says banks must charge for research separately from broking services, clashes with the US regime, which bans this approach unless lenders register as investment advisers. This is something American banks want to avoid because it creates a fiduciary duty to clients and limits their ability to trade, according to two people familiar with the matter, who asked not to be identified because they’re not authorised to speak publicly. "Meeting the requirements of the fiduciary duty that would be imposed raises very significant operational and cost issues," said William Yonge, a London-based partner at law firm Morgan Lewis. "This is a disproportionate solution for accepting cash from EU managers who are merely receiving research from their broker-dealer under the ...
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