Take note - MiFID II reforms may have global impact
On April 7 the EC adopted a rule, in the form of a Delegated Directive, that pushes the prospect of fully separating investment research costs from dealing commissions a significant step closer to becoming reality. Whilst this plays out thousands of miles away from Australia – local market participants should be watching this closely. If this becomes law, it may encourage non-EU regulators to adopt the EU approach. Global regulators have taken aim at the inefficiencies of the current market model and after years of partial reform, should seize upon this as an opportunity to reduce system ‘leakage’ in the form of client monies being used pay for research that is neither ‘substantive’ nor 'differentiated'. Investors should welcome the benefit of lower costs associated with managing their funds. Investment managers should enjoy the opportunity to only have to pay for what they value. Research providers must start developing explicit pricing models and making plans to cut their cloth further as/when the regulatory changes are confirmed….this will also level the playing field for independent research providers – the new growth industry.
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