1. 20 October 2011

    European Commission formalizes revamped MiFID – MiFID II - and companion legislation, Markets in Financial Instruments Regulation, MiFIR

  2. 12 June 2014

    MiFID II level 1 texts published in the official journal of the Eu-ropean Union

  3. 30 June 2016

    EU extends MiFID II introduction to 3 January 2018 from 3 Jan-uary 2017

  4. 10 July 2016

    FCA publishes policy statement on all aspects of Mifid11 im-plementation

  5. 3 July 2017

    Date for MiFID II to be adopted by EU member states. 17 states miss deadline

  6. 3 January 2018

    MiFID II and MiFIR to apply to all EU states

What you need to know

The Markets in Financial Instruments Directive II, or MiFIDII, is the second iteration of MiFID, an EU directive originally adopted in November 2007 to streamline financial services and ensure the EU could operate as a single financial market.

MiFIDII was designed by the European Commission following the 2008 financial crisis, in order to increase market transparency and efficiency.

The MiFIDII legislation was voted into law in 2014 and after the European Securities and Markets Authority completed technical specifications, it will come into force on 3 January 2018. All EU member states are required to transpose the legislation into their own national statute.

Among notable measures, MiFIDII stipulates that execution fees are unbundled from research fees. From January 3, asset managers in the EU, and certain categories of managers dealing with EU-registered entities, will not be able to receive most types of investment research unless paid for either from their own resources or via a Research Payment Account (RPA).

More about MiFID II

Research providers must implement a systematic, transparent pricing structure for all services provided to European asset managers.

  • European brokers must establish individual charges for their execution services. These charges should only demonstrate the cost of executing the transaction.
  • Understanding the market for your firm’s research will be a key consideration in the pricing of research with respect to unbundling.
  • Understanding and protecting the intellectual property value of your firm’s research reports will become increasingly important to revenue generation for the sellside.
  • The services an asset manager pays the research provider or sell-side broker must not be tied to any cost associated with execution services.

Under MiFID II, European asset managers must fund research purchases either through an established Research Payment Account (RPA), or through their own P&L.

  • To budget for research consumption, asset managers must quantify and qualify research value. Understanding your firm’s readership trends is key. Who are your top-read brokers, analysts and sectors?
  • The asset manager must maintain a full audit trail for all research-related transactions, and demonstrate budget allocation to clients and regulators.
  • Asset managers must safeguard their firm from inducements to trade, ensuring content will be viewed only by permitted firm members.
  • No research charges may be linked to the client’s transaction values or volumes.
  • The asset manager must have a process in place to deal with a potential a surplus in the RPA at the end of a given period. In this case, the asset manager may either offset the surplus against future research costs, or to return the surplus to clients.

MiFID II will further best execution and ultimately strengthen consumer protection, enhancing client relationships.

  • The underlying value of investment research is now subject to closer scrutiny.
  • BlueMatrix believes MiFID II presents a unique opportunity for quality research to derive a fair market price.
  • MiFID II brings an opportunity for research providers offering a quality product to be seen, and for research consumers benefit from better research.
  • BlueMatrix notes that European research providers are only required to price research separately when transacting with asset managers in Europe. However, since the clients of European asset managers will be receiving information on research transactions, it’s possible that some clients may well request the same information from investment managers outside of Europe.

Receive the research you want, when you want it. BlueMatrix supports investment professionals, both research providers and asset managers, in meeting MiFID II requirements. A preferred productivity tool for global asset managers, Research Manager provides users with a single platform to access, quantify and consume research from over 950 research providers.

  • Research Manager offers detailed document analytics to help value research. Filters for top-read brokers, analysts, sectors, documents, and top saved documents will help asset managers search for and then evaluate the value of research and then set their budget as required by MiFID II. Qualitative data to help develop a transparent pricing structure.
  • Common supervisory approaches and practices in the EU continue to evolve; BlueMatrix’s responsive software development means that BlueMatrix can answer swiftly to any changes in the regulatory climate with frequent software releases.

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