RSRCHXchange, the Institutional research aggregator and marketplace, today revealed the results of its latest survey into the readiness of asset managers for the MiFID II research unbundling rules ahead of their introduction in January 2018.
Following in the footsteps of a similar survey carried out in Q4 2016, the current study, conducted by Survation in Q2 2017, sought the opinions of 562 respondents, representing over 450 firms with AUM ranging from $100bn+ to less than $1bn.
The new poll shows increased awareness of the MiFID II research rules with only 2% of respondents now unaware of unbundling. Meanwhile, significant slippage has occurred in terms of the timing for MiFID II compliance, with the vast majority of asset managers leaving this until the final quarter of 2018 or later.
The number of respondents expecting to be MiFID II compliant during the last quarter of 2017 or early 2018 grew from just over 50% in the 2016 poll to 85% in the survey revealed today.
Jeremy Davies, Co-Founder at RSRCHXchange, said:
As we rapidly approach the MiFID II deadline, it is clear that decisions are being made and the largest asset management firms are the most advanced in their process as they already transition towards MiFID II compliance. And, although we see overall MiFID II readiness slightly pushed back towards Q4 2017 or early 2018, there is no doubt that the unbundling process is well underway. At the same time, the onus of setting a price for research rests firmly with providers; as of now this process is not yet well advanced.
Regarding the challenge of implementing unbundling, over 60% of respondents have already set or begun to set their research budgets and payment method to use: transactional RPA, RPA funded by a direct charge to the client, P&L, or a hybrid model. Just under 36% of respondents had not decided how they would pay for research.
United Kingdom, Benelux and Germany companies preferred payment from the firm’s own P&L, while the direct charge to the client was very popular in Scandinavian countries and Spain.
Setting and assessing research budgets remains a challenge for 40% of respondents, and the process is being held back by a lack of information on research pricing: 23% of respondents have not received pricing information from any of their research providers. A large disparity also exists in pricing information received by the largest and smallest asset managers.
On buy-side research consumption, the big winners are aggregators and provider portals, with the use of email seen as lacking in terms of consumption tracking and leaving firms open to inducement risk.
In addition, 77% of respondents expected the number of research providers to fall, and 27% anticipated a fall in the use of email as a delivery method for research.
Vicky Sanders, Co-Founder at RSRCHXchange, said:
Some of the results of this survey will come as a surprise to the industry, especially the expected decline in the number of research providers. In anticipation of these unbundling changes, we have set up an aggregator and marketplace that ensures asset management firms can maintain the diversity of views that they require to generate alpha. Backed by NEX, we make investment research from more than 200 banks, brokers & boutique research providers available to over 1,000 asset management firms.