Fewer than 10% of asset managers, brokers and research providers believe they will be fully ready for Mifid II by January 3 © FT montage
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Ashmore is the only major asset manager yet to decide whether it will make clients pay for external research when sweeping new European market rules come into force on January 3.
One of the most hotly debated areas of the regulation package known as Mifid II, a revamped version of the Markets in Financial Instruments Directive, is the requirement for fund houses to disclose how they pay for research.
This will end an opaque system under which asset managers received research for free in return for placing trades with investment banks and brokers.
Public disclosure of how an investment manager will charge for research is important for clients looking for certainty amid Mifid II upheaval.
The FT has contacted scores of asset managers in recent months to determine how they will act. The vast majority, including BlackRock, Schroders and Franklin Templeton, have opted to absorb the cost of paying for research themselves.
Ashmore, which specialises in emerging markets, declined to comment. Tom Shippey, Ashmore’s finance director, told the FT in September that the group was still locked in discussions over how they will charge.
Paris-based Lyxor said on Wednesday that it would absorb the cost of research for the funds it manages directly. Some clients have money on Lyxor’s platform that is run by third party managers. The decision over research costs incurred by those delegated funds will be left to each individual manager.
Candriam, the €100bn Franco-Belgian fund house, also said on Wednesday it had decided to absorb research costs in its own profit and loss account.
The Mifid II rule changes has sparked a fierce debate over the true worth of research as asset managers sit down with external analysts to thrash out how much they are able, or willing, to pay.
The price range for a single phone call with an analyst is $800 to $10,000, with a global average of $2,000, one recent survey on pricing data suggested. Some asset managers have indicated they were being asked to pay as much as $10m annually for complete access to some banks’ research platforms.
However some in the industry have warned that the new rules could have unintended consequences, such as making less research available due to constrained budgets.
“Mifid II and the research changes are probably leading to a more inefficient market than before,” said Andrew Formica, co-chief executive at Janus Henderson.
There are signs the industry is still scrambling to be fully prepared for the new legislation, with one recent survey suggesting fewer than 10 per cent would be fully ready by the January deadline.
The Securities and Exchange Commission recently granted temporary relief to US banks and brokers to ensure they comply with the new rules, quelling a major source of disquiet within the investment industry ahead of Mifid II’s arrival. The “no action relief” granted by the SEC will allow US institutions to accept direct payments for research without it being considered investment advice, a classification that would increase their compliance obligations.