BlueMatrix discusses EU preparedness for MiFID II
Research providers and asset managers gathered on November 18th at the Soho Hotel for the 2016 BlueMatrix London Research Roundtable.
Its widely understood the need for monetary research budgeting under MiFID II compliance will have a major impact on European asset managers. The conversation around MiFID II assumed a tone of immediacy that delineated the London Roundtable from its sister event in New York.
While the EU geopolitical landscape has certainly changed since the 2015 BlueMatrix London Research Roundtable, the FCA has reiterated its intent to implement MiFID II despite hopes by some that Brexit would nullify the directive in the UK.
BlueMatrix facilitated further discussion on MiFID II as it relates to both global asset managers and research providers. BlueMatrix was honored to host Imogen Garner, Partner, Norton Rose Fulbright; Neil Shah, Director, Edison Investment Research; Francis Land, Director, Commission Management, IHS Markit and Nicholas Mather, Chief Executive, TS Lombard.
Mixed preparedness for MiFID II
Imogen Garner observes that many asset managers have scaled back their preparations for MiFID II in light of the initial effective date having been pushed back to January 3rd, 2018. Speaking from a legal prospective, Garner cautions that UK regulators in particular have remained keen on regulating asset managers for about a decade now. "Regulators are going to be really interested in making sure that firms are ready on time and are complying in the way that's in line with their expectations."
Regarding the current state of cooperation between the buy-side and research providers, Nicholas Mather illustrates that the situation seems "a bit like the battle of Waterloo but before the fighting started. The armies have marched to the top of the hill . . . but no actual fighting."
As it stands, the dialogue is largely silent negotiation, Mather adds.
MiFID II and price discovery
Pricing research will increase innovation and efficiency in the research industry, Neil Shah of Edison Investment Research forecasts. Shah estimates MiFID II will yield long-term benefits not just for investor returns, but for any research provider currently offering a valuable product.
The panelists each discussed the notion that independent research providers stand to benefit from the new pricing structure under MiFID II. As investment professionals consider how to spend their dollars, niche research providers offering sector-specific or otherwise specialized research are uniquely positioned to increase their readership. If you're an independent research provider, Neil Shah says, "it's time to get noticed."
On the other hand, Nicholas Mather believes the future of research production lies in large research shops. "I'm a huge believer that research is sold, not bought, relates Mather, "the middle ground, the independent space, is a tricky matter."
Francis Land considers a big potential upside resulting from MiFID II would be a lessening of the divide between brokers and independent research providers. Price discovery, Neil Shah adds, "can be horribly painful for the mediocre but is actually very good for the good [research] providers."
The BlueMatrix Creator 4.0 authoring platform can help IRPs increase the visibility of their research on third-party portals.
The Roundtable panelists emphasized the benefits of MiFID II for the investor in that the regulation aims to drive down costs to asset owners. Increased transparency will beget new types of research and innovative products. View the video of the panel discussion above (registration required).