MiFID II Prompts Swiss Prime Brokerage UBS to Halt Research Distribution

Prime brokerage UBS has halted the distribution of its equities research data feeds to third parties starting from today. The move follows up on the introduction of the MiFID II MiFID II MiFID II stands for the Markets in Financial Instruments Directive, and is the second iteration of a sweeping directive. As such it is known as MiFID II. The original Markets in Financial Instruments Directive (MiFID) became effective in November 2007. It was intended as the foundation of the EU’s Financial Services Action Plan, a comprehensive project to create a single European market in financial services. MiFID is intended to create a level playing field for firms to compete in the EU’s fina MiFID II stands for the Markets in Financial Instruments Directive, and is the second iteration of a sweeping directive. As such it is known as MiFID II. The original Markets in Financial Instruments Directive (MiFID) became effective in November 2007. It was intended as the foundation of the EU’s Financial Services Action Plan, a comprehensive project to create a single European market in financial services. MiFID is intended to create a level playing field for firms to compete in the EU’s fina Read this Term regulatory framework in Europe, which is limiting the availability of free research to clients of major banks.

Until now the Swiss bank key provided price targets and insights to Bloomberg and other third-party providers. Major research firms have been regularly updating their price targets on various Equities Equities Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling pa Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling pa Read this Term and the research that was typically bundled with a trading account was delivered to clients for free.

MiFID II Changes

The introduction of MiFID II has mandated banks to stop providing free research and introduce charges for clients willing to access advanced insights into the securities they are trading. As a result, banks have unbundled the products and began charging clients hefty fees for getting the added value.

Now MiFID II regulations have forced one of the big industry players to reconsider providing any part of its proprietary info to third parties. With the data including price targets and estimates, UBS is aiming to limit the ways in which its intellectual property can be used by outside data providers.

UBS Sets Out New Requirements for Third Parties

A note which was sent to clients and third-party data providers such as Bloomberg and Reuters informed them that free research might still be available provided that some requirements are met.

UBS has not elaborated on the matter and as of right now it is not clear what the criteria which the Swiss bank uses to vet third-party data providers are. Nevertheless, the difficult decisions which the research desks of major banks have had to make are playing a decisive role in the generation and consumption of analyst research.

“We are looking for ways to better protect the value of our research content.We are therefore suspending distribution of these data sets (i.e., ratings, price targets and estimates) from certain third-party platforms which we believe do not meet our requirements,” the email from UBS’s Global Head of Research, Juan Luis Perez, said.