Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

European Commission backtracks on Mifid II unbundling requirements

1 Comment
European Commission backtracks on Mifid II unbundling requirements

Asset managers will be able to continue using commission sharing agreements (CSA) under Mifid II, according to a European Commission document.

A widely debated aspect of Mifid II regulation has been the requirement to unbundle research costs, which has been a particular worry for smaller asset managers.

However, according to a document seen by Reuters, the European Commission has changed its stance on the requirement and is looking to adopt a more flexible approach.  

Under the current proposals, asset managers will have to pay directly for research from broker firms so it cannot be considered an inducement. The use of dealing commission for research and access to analysts will therefore be banned when Mifid II is introduced in January 2017.

The new document, which is still in draft stage, said that CSAs will not face a ban, subject to certain conditions, where a single payment can continue. As long as the arrangement includes a breakdown of the charges, asset managers will be able to continue paying for research and broking through CSAs.

‘Every operational arrangement for the collection of client research charge, where it is not collected separately but alongside a transaction commission, has to indicate a separately identifiable research charge,’ the document noted.

Earlier in the year, think tanks New City Initiative (NCI) and Open Europe warned that an outright ban of dealing commission to help pay for external research would disadvantage smaller managers who are unable to afford the extra costs.

The NCI also criticised the Financial Conduct Authority’s support of unbundling and recommended that the proposal be dropped and an alternative means to offer transparency to investors found.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Big City Bright Future

Big City Bright Future

Big City Bright Future, the brainchild of BlackRock, is a three-week work experience programme for school leavers looking to forge a career in the City.

Play Kames' Ennett: Trump good for US high yield, but beware Europe

Kames' Ennett: Trump good for US high yield, but beware Europe

Kames Capital’s head of high yield David Ennett believes the changing political landscape will be a positive for the US, but negative for Europe in 2017.

Play Philip Milburn: why inflation won't run out of control

Philip Milburn: why inflation won't run out of control

Kames bond fund manager views inflation as more of 'scare' than a 'problem' and is positioning his portfolios accordingly.

Read More
Your Business: Cover Star Club

Profile: from Batman Live to commodity beta

Profile: from Batman Live to commodity beta

Charteris may be a family affair, but the company is not at any risk of turning sentimental

Wealth Manager on Twitter