85% of Asset Managers Will Comply with MiFID II Unbundling Rules in Q4 or Later

MiFID II comes into force in January 2018 and recent research indicates that asset managers have gained an increased awareness of the upcoming MiFID II research rules, with only 2% of respondents now unaware of unbundling requirements.

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Complying with the far-reaching legislation will not be cheap or easy. Under MiFID II – the updated Markets in Financial Instruments Directive – payment for research can no longer be bundled with other services and paid for using Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term commission, as this would be considered an inducement.

RSRCHXchange, an online aggregator and research firm, polled 562 asset managers and found that 85% of respondents, up from 50 percent in Q2 2016, knew their Compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term date, expecting to become compliant by the fourth quarter of 2017 or later.

The survey also found that the vast majority of asset managers are leaving the timing of MiFID II compliance until the final quarter of 2018 or later.

However, fund management firms have already begun the hard work of implementing unbundling. According to the survey findings, over two thirds of respondents (60%) have set or begun to define their research budgets, as well as deciding on which payment method they intend to use.

Other results from the survey included: 77% expect a fall in the number of research providers while 27% anticipate the use of emails as a delivery method to drop eventually.

Jeremy Davies, co-founder of RSRCHXchange, commented: “As we rapidly approach the MiFID II deadline, it is clear that decisions are being made and the largest asset management firms are the most advanced in their process as they already transition towards MiFID II compliance. And, although we see overall MiFID II readiness slightly pushed back towards Q4 2017 or early 2018, there is no doubt that the unbundling process is well underway. At the same time, the onus of setting a price for research rests firmly with providers; as of now this process is not yet well advanced.”

Vicky Sanders, co-founder of RSRCHXchange, added: “Some of the results of this survey will come as a surprise to the industry, especially the expected decline in the number of research providers. In anticipation of these unbundling changes, we have set up an aggregator and marketplace that ensures asset management firms can maintain the diversity of views that they require to generate alpha. Backed by NEX, we make investment research from more than 200 banks, brokers & boutique research providers available to over 1,000 asset management firms.”