MiFID II research unbundling to increase M&A pressure on small/mid UK managers

Could leave them unable to compete with larger players

Fresh pressures will be exerted on small- and mid-sized UK asset managers as industry commentators warn the unbundling of research payments under MiFID II could leave them unable to compete with larger market participants offering lower fees.

According to a paper by Edison Investment Research entitled The Future of Equity Research, plans to separate research costs from execution spending following the implementation of MiFID II on 1 January 2018 will lead to a refocusing of the third-party equity research space, alongside a contraction in the buy-side market. Currently, investment research is mostly charged to investors through a commission-sharing agreement, whereby fund fees are used to pay a broker on the understanding that a portion of this charge will be passed onto an independent research provider, at a variable rate co...