Instinet adds unbundling tools to commission management platform

Instinet establishes a vendor search and credit tracker in response to buy-side feedback, ahead of unbundling requirements.

Instinet has established two new tools within its commission management platform designed in response to feedback from buy-side clients, ahead of MiFID II‘s unbundling rules.

A vendor search tool has been added to allow users to find research providers by searching through various categories, alongside a credit tracker to help clients track and manage commission sharing agreements (CSA) and research payment accounts (RPA).

The commission management platform is available through Instinet’s Plazma tool, which currently has over 220 clients signed up in Europe alone.

Patrick Gill, executive director for Instinet in Europe, told The TRADE the developments were designed in response to feedback from the firm’s buy-side clients.

“An important and interesting perspective is the nature of engagement with our clients, which has stepped up a gear.

“In the last 18 months we have moved from meetings that were very much focused on conceptually planning and information gathering, to implementation and execution of programmes our clients want to put into place,” he said.

Recent studies have suggested the buy-side remain uncertain of their obligations ahead of MiFID II’s unbundling rules and the ways in which they will be able to pay for research.

A poll of 234 asset managers - conducted by online research marketplace, RSRCHXchange - found with the deadline less than a year away, the industry is split over how it should pay for research.

Gill explained Instinet believes the RPA model will be the dominant method of paying for research under MiFID II.

“Based on feedback from our buy-side clients, we remain of the opinion that the majority will use client assets to fund research through the formation of a research payment account. Although, we have seen interest among the various funding options within the RPA model,” he explained.

Instinet was authorised by the Financial Conduct Authority to become a payment institution in July 2015, which allowed the firm to broaden the services it offers clients and ‘fine tune’ the platform and service model.

With less than a year to go until unbundling implementation, Gill predicted management reporting will become a more important issue for clients.

“I expect one of the key developments will be around management reporting and we have been engaging with regulators and industry bodies on the subject. The exact nature of our reporting suite will evolve in tune with our client's demands, and as regulatory requirements become clearer,” he said.