With Mifid II approaching in one year’s time, close to 40% of asset managers are not prepared for the ‘unbundling’ of research costs, according to the Electronic Research Interchange (Eric).
Over 70% of asset managers will need to re-examine their sources of research under the new regulation. The findings from Eric’s European Asset Management Survey pointed to a significant overhaul in investment research provision. Close to three quarters of the asset managers surveyed said they were likely to reduce the investment bank research they subscribe to.
‘Mifid II will significantly change the investment industry, but the consumption of quality research will remain a critically important element of the investment process,’ said Chris Turnbull, co-founder of Eric.
Despite this ‘significant overhaul’, only 40% of managers expect greater research fee transparency will benefit clients.
According to the survey, from January 2018 close to three quarters of asset managers will apply greater scrutiny to sources of research, with 38% of firms considering expanding their internal research teams.
Turnbull commented: ‘Our findings show that asset managers expect relationships across the industry will be deeply affected under the new regulatory regime. While we believe that investment banks will continue to play a critical role in the provision of quality research, it is clear that both the buy and sell side must adapt to new research procurement and distribution strategies in order to avoid getting caught out in January 2018 and continue serving the best interests of the end-investor.’