[ I N - D E P T H
more liquid market, causing wider spreads and greater
price swings. Over the longer term, a focus on large-
cap indices from both research houses and investors
means we could see a hit to smaller company IPOs due
to a lack of investment appetite, meaning fundraising
will need to come from other sources.”
Inconclusive evidence
As the unbundling requirements have had over a year
to bed in, some market participants are more critical of
MiFID II’s failure to introduce greater transparency of
costs thus far.
Considering the effects of MiFID II over 12 months
into the regime, Chris Turnbull, CEO of research
marketplace ERIC (Electronic Research Interchange),
says that despite expectations that the regulation
would unveil the true costs of research, pre-MiFID II
behaviours such as deciding the value of research once
it has been consumed, have not changed. Turnbull
believes that the UK financial regulator’s lack of input
and enforcement of research unbundling has played a
part in the slow progress of change.
“It is easy to see this as a disappointment and ulti-
mately a signal of MiFID II’s struggles, but things are
starting to move in the right direction,” he says. “A
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R E S E A R C H ]
mitigating factor has been that the
Financial Conduct Authority (FCA)
has not been active enough in
enforcing penalties and facilitating
the transition. Firms have been
given free reign, so it is unsurpris-
ing that some haven’t acted in the
spirit of the regulation.
“The overwhelming majority
of firms were unprepared for the
changes last January, and the state
of confusion continued throughout
the year… We must now accept that
achieving an effective research
market will be a slow process, as
we are very much in the infancy
“We must now accept that achieving
an efficient research market will be
a slow process, as we are very much
in the infancy stage at this point.”
CHRIS TURNBULL, CHIEF EXECUTIVE,
ELECTRONIC RESEARCH INTERCHANGE
Issue 59 // TheTradeNews.com // 67