RANKING THE ANALYSTS: Industry set for a huge overhaul
MiFID2 changes the way investors pay for research and is likely to become a more stringent industry standard
The investment research industry might look entirely different in a few years. Or it might not. Regulators are pushing hard for a severing between research and trade execution that could succeed. But several market forces are pushing back. Regulators want the way investors pay for research to change dramatically. Instead of bundling it in with the commissions they pay brokers to execute trades, fees for research will be separate from the fees for execution. While there is still some debate about just who ends up paying them, the general idea is that the end-clients in managed funds should bear the burden of execution, but the fund managers themselves should bear the cost of research. Research is seen as a benefit to the fund manager, while execution is part of the portfolio. The changes fall under the European Union’s Markets in Financial Instruments Directive, commonly called MiFID 2. The directive imposes various changes to the way asset management works in Europe and it will have...
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