MiFID II Handbook | Page 65

MIFID II FAQs

ACCESS TO RESEARCH WILL … NEED TO BECOME EASIER WITH SOME ADVOCATING THE “ EXCHANGE ” MODEL OF DISTRIBUTION WHERE RESEARCH FROM MULTIPLE SOURCES IS PROVIDED THROUGH A CENTRAL HUB .
RALPH ACHKAR , DIRECTOR OF CAPITAL MARKETS , COLT
research analysts have limited exposure or analysis of the macro / geopolitical space within their framework . Asset Managers are demanding a consistent , objective and conflict-free framework that connects the dots from macro to mid ( sector ) and micro ( bottomup ) research .
Secondly , expectations for digital innovation have increased . PDF and email based distribution of research is no longer viewed as acceptable . Managers are demanding more deconstructed and personalised research with sophisticated tools such as semantic search , dashboards and interactive charting to integrate research into existing workflows .
The banks response to digital innovation – putting reports online so they can capture usage analytics is a self-serving model that not only diminishes the user experience but fails to add value for asset managers .
Q : HOW SHOULD RESEARCH SPEND BE ALLOCATED ?
MC : Asset managers will have to decide whether to fund research payments from their own P & L or explicitly charge clients . It seems some larger houses will swallow the cost themselves , which could put pressure on smaller houses who are less able to absorb that cost .
GK : In the short to medium term , investment firms are likely to invest more in their in-house research capability . Over time , we are likely to see the emergence of a small number of specialist research firms , who are able to differentiate themselves by outperforming their peers . MiFID II will undoubtedly lead to brokers reducing the size of their research teams .
BM : Asset managers should first look at the asset class and geographic needs from a top-down perspective . Secondly , they should then look to identify best-of-breed research providers that provide a coherent framework that aligns to the firms internal investment strategy .
In order to demonstrate value , managers will need to be able to capture value metrics on an on-going basis . Metrics should be defined in advance to ensure they can be captured through selected providers .
In order to successfully implement the framework , managers should select research providers that can :
●●Distribute research through digital mediums that enable usage to be captured effectively
●●Provide sophisticated alerting technology to ensure the right research is received at the right time
●●Provide search technology that audits number of searches
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