European investment management regulation announced today could lose brokers business, analysts their jobs and also hit fund managers’ profits, experts have warned.
The final Markets in Financial Instruments Directive (Mifid) II rules, which are due to come into effect in January 2018, include a requirement for investment banks to be more transparent about their costs. Banks and investment managers will be forced to divulge research fees to their clients, such as fund and asset managers.
The regulations are an EU directive that attempts to bring together regulation of investment services across all members of the European Economic Area. They are designed to inject greater transparency into market trading and require derivatives to be traded on a platform rather than privately between lenders.
“Mifid II is likely to hit analysts hard – it could be that research teams within banks shrink significantly,said Emma Cleveland, a managing director of boutique legal advisory firm Cleveland & Co.
Transparency in itself is a good thing, but at what cost? Unbundling research from commission means banks increasing charges to the clients, and could ultimately result in lost business for banks.