Predictions for 2018: Research

Experts from across the industry give us their predictions on what will happen in 2018, today we look at MiFID II research trends.
By Editors

Strategies for outperforming in a new environment
Vicky Sanders, co-founder, RSRCHXchange

Next year we move on from panicking, planning and preparing for MiFID II research unbundling to working through the practicalities and consequences (intended and unintended). As unbundling and best execution impact everyday decisions, new behaviours will emerge. The focus for management teams will shift from meeting regulatory requirements to developing strategies for outperforming in the new environment. With more buy and sell side firms looking into digital strategies, technology will play a bigger role in creating efficiency and competitive advantages for front office functions across the investment industry. That doesn’t mean robots on the trading floor, but using technology to upskill individuals and businesses.

New tools for gaining variety of insights
Scott Rosen, CEO, Visible Alpha

MiFID II’s unbundling requirements have greatly accelerated the pace of change to the institutional research business. Even without MiFID II however, increased competition, tighter budgets, and heightened focus on the quantified value of traditional sell-side research will force additional structural changes on the industry. In 2018, you will begin to see tools emerge that enable investment professionals to easily discover and incorporate insights from a variety of sources without leaving their own online analytical environments, and research providers gaining greater control over their intellectual property. We also believe you’ll see further research specialisation and much greater transparency into the reasons behind analyst’s opinions.

A big year for research
Sourish Gupta, director of business development for financial services, The Smart Cube

The impact of MiFID II will be felt globally in 2018. On the buy-side, it will really be a year for ‘trial runs’ as funds deal with the impact of buying and receiving research from a stripped down, significantly shorter list of providers. This could prove problematic for some fund managers, especially those who rely on incoming research for idea generation, or prefer to compare views from a wide base of researchers. This may mean they ultimately have to broaden and/or change their research provider lists at the start of 2018, and also review the ideal balance of in-house research coverage and externally sourced research to sufficiently address their needs.