post MiFID, the research world has been reset with global impact

With the first quarter of business under MiFID II complete, MPI Europe, the specialist financial services consultancy,  has published results of its MiFID II Research Impact survey to assess the impact of the regulation, the approaches adopted, and the challenges being faced handling research and managing associated processes in an effective way across the market under the new regime.

Key Survey Results
▪ Significant investment research impact: Majority view confirms that MiFID is
having some negative or a material negative impact on their business, particularly
for investment research.
▪ More change coming, day 1 compliance is only first step: Over half of
respondents believe that, despite good levels of initial compliance, the regulatory
bodies will introduce more changes or provide further clarity to grey areas of
regulation in the coming months – prompting more change.
▪ Global impact needing flexible process: Both Global and non-EU firms who have
significant non-MiFID business are feeling the impact and a need to support a
multiple model/process.

The survey gives a sound confirmation of last year’s forecasts. As predicted by MPI and other
market research pre-MiFID II, the volume of research being consumed and produced in the
market has fallen and post implementation both sides of the market have now confirmed that
there has been a notable negative impact in this area. All Brokers and Independent Research
Providers have responded that they have seen their research level decrease or decrease
slightly. This is confirmed by the buy side with a 67% majority saying they are taking less
research. The market’s move to pay for research direct from P&L has impacted consumption
as predicted.

Whilst there is some relief that market participants survived the first quarter of MiFID II, the
increased competition around a smaller volume of research, the likely further changes to EU
rules and the global impact and need for flexibility are significant challenges for the rest of
2018. MPI see this an area ripe for improvement, flexibility, and automation which legacy
processes and applications, even with larger numbers of people and ad-hoc support, cannot
address.

Research Method
MPI Europe’s impact survey was conducted during April and May 2018 using a poll of a list of
over 6000 contacts and received responses from a cross section of Broker, Investment,
Independent Research Provider, Consultancies and other professional services firms
impacted by MiFID II.