Emerging markets investment bank Exotix Capital has decided to turn a dreaded new piece of regulation to its advantage, boosting its specialist research credentials.
The firm has made a number of new hires over recent weeks as it believes the latest Markets in Financial Instruments Directive (Mifid II) will increase the demand for focused, niche firms.
Having hired the International Monetary Fund’s Christopher Dielmann last week, and ICBC Standard Bank’s Matthew Pearson earlier this month, Exotix has now taken on Serge Marston from NEX Markets, Chiamaka Ezenwa from Morgan Stanley and Mbithe Muema from African Alliance Kenya.
“Mifid reinforces the reasons for trying to provide clients with high quality services,” said Exotix’s chief executive Duncan Wales.
“The big universal banks trying to be all things to all people is going to be difficult to maintain. It’s likely that they might lose teams, lose analysts, and become much more focused on the areas they can add high value. We are a specialist, and we are confident that we can add value in our space.”
Mifid II is forcing investment managers to “unbundle” the cost of their research, meaning they must charge analysts for their work separately rather than lumping it in with the fees paid to brokers.
Research has indicated this will have a profound change on the industry, as brokers will not be able to send out research for free and investment managers are looking to reduce their costs. Some may look to perform research in house, while others will source specific work from the best providers or pay a high subscription fee to a top-tier provider.
But Wales believes that a specialist firm should be insulated from many of these headwinds, as emerging market knowledge may be too niche for a firm to bring in-house or for a generic investment bank to offer.