CFA UK study surveys stakeholders on MiFID II regulation one year on

Thursday 2 May 2019

- CFA UK interviews stakeholders one year on from implementation of MiFID II

- Study looks into research unbundling and product governance reforms

- Finds general support for intentions behind the regulation but divided opinion on whether its aims will be ultimately met


CFA UK has published a report providing a summary of feedback on some aspects of the MiFID II reforms, one-year on from its implementation.
The publication gives the findings from sixteen interviews conducted by volunteers of the Society.  Stakeholders in both the buy- and sell-side were interviewed as well as representatives from independent research houses and the corporate investor relations industry.
The report complements the results of a European survey conducted by CFA Institute at the end of 2018 which found that sell-side firms in general have cut back their research departments in response to the buy-side reducing its spending on research and increasingly sourcing its research internally and from other sources.

CFA UK found that the MiFID II research unbundling reforms had accelerated an already established trend of reduced sell-side research coverage of small- and mid-sized companies issuing both equity and fixed-income securities.  This gap was increasingly being filled by research sponsored and paid for by the corporate issuers themselves.  Corporates in some cases found that they no longer had any sell-side coverage at all and so were reaching out to ‘independent’ research firms and paying them to produce it.

Most interviewees felt that the unbundling research reforms had met their immediate objective of making buy-side research procurement more efficient and less costly.  Most of the costs were now being absorbed by the buy-side and not being passed on to end-investors.  Less ‘maintenance research’ was being produced; opinion was divided as to whether research quality had improved, while most agreed that coverage had reduced in some areas.

In the product governance area, firms interviewed reported quite widespread disparity in the quality of information being shared between distributers to manufacturers, especially when it involved counterparties from outside the EU-area. Firms were looking longer-term to agree common templates and automate the gathering and calculation of the vast amounts of costs and charges data.

Looking into the future, interviewees were optimistic that end-investors would continue to benefit from lower or even zero charges for research.  However, there were concerns about how the small- and mid-sized firms would survive in the longer-term on both the buy- and sell-sides of the market. Further consolidation particularly on the buy-side threatened to restrict investor choice which would ultimately most likely not be to the end-investors’ benefit in the longer-term. Some interviewees also had concerns about research coverage for the small- and mid-sized companies and worried that issuer-sponsored research was not the best answer to fill the void.

Download MiFID II: one year on

Notes to editors:

For further information or to request an interview, please contact Ogilvy:


About CFA UK

Part of the worldwide network of member societies of CFA Institute, CFA UK represents the interests of over 12,000  investment professionals in the UK.