Buy-side remain uncertain of MiFID II’s unbundling obligations

Survey finds 38% of buy-siders are not confident of being ready for 3 January 2018 unbundling deadline.

Despite less than a year until the implementation of MiFID II’s research unbundling rules, a new study suggests many buy-side firms are still not entirely sure of their obligations.

Electronic Research Interchange polled almost 100 buy-side, sell-side, analysts and wealth management professionals to identify the challenges ahead of MiFID II.

Over a third of buy-side respondents stated they are not confident of being ready for implementing the unbundling rules - due to come into effect on 3 January 2018.

Respondents agreed the need for research will remain consistent following unbundling, although a new model is required to ensure the production of research remains practical.

A quarter of respondents said research spending will increase, but the remaining 75% predict spending will fall or remain the same.

Chris Turnbull, co-founder of Electronic Research Interchange, explained the survey’s findings reflect a change in the industry, but the consumption of quality research will remain critically important.   

“MiFID II has kick-started a drive for transparency that will recognise the value of high quality research, but there is still significant work to be done to meet regulatory obligations,” Turnbull said.

A separate survey - carried out by RSRCHXchange earlier this month - found half of buy-side firms are undecided on how to pay for research ahead of unbundling.

Just 13% of respondents said they expect to continue paying for research from all of the largest investment banks, while 72% said they will use research from less than five banks.

In terms of budgets for research, RSRCHXchange’s poll found buy-side firms do not expect this to fall dramatically, with 42% stating their budgets will remain the same and 26% expecting budgets will rise.