Australian banking group Macquarie has cut the number of analysts it employs within its European division in response to MiFID II requirements forcing investors to pay for reports and analyst reports.
The move will see Macquarie reform its research coverage of around six key sector as a "handful" of analysts depart the firm, according to the Financial Times.
MiFID II, which came into force on 3 January, forces firms to unbundle the cost of broker research from other services, preventing the previously established practice of paying for research implicitly through trading commissions and business with the broker.
The regulation has seen fund managers cut the number of research providers they use, forcing the sell side to make their offerings more attractive, while managing costs to ensure research provision remains profitable.
Macquarie said on Monday (8 May) it would now focus its efforts around a core of six sectors: infrastructure and utilities, metals and mining, oil and gas, financials, disruptive technology and consumer and quantitative research.
The firm would not comment to the FT on whether it would bring its efforts in other areas to a close, whether there would be further job cuts or say how many people it employed in its European equities research division.
A person familiar with the plans, however, told the FT that there would be a "handful" of cuts.
However, Macquarie said it had also hired Hari Sivakumaran, who will cover European banks, and Royal Bank of Canada's Peter Lenardos as its head of financials research.
Meanwhile, Sreedhar Mahamkali and Guy Peddy were named as co-heads of the newly formed disruptive technology and consumer team, which the firm said would provide "unique insights on how technology and new disrupters impact established formats across retail, media and telecommunications — a fast-moving topic that investors are keen to explore".
Shai Hill, Macquarie's head of European research said: "The latest developments in our team not only reflect our commitment to our European research business but most importantly ensuring that our clients receive the benefits of Macquarie's global perspective in the specialist, dynamic sectors they are interested in."
Nomura remains the only major bank to have scrapped European equities research efforts as a result of MiFID II, having made the decision in 2016, and has indicated it could also pull out of US research, as the rules begin to have a global impact.
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