SEC grants relief period for MiFID II research rules

US brokers given 30-month relief period as SEC looks to reduce confusion over cross-border compliance.

The Securities and Exchange Commission (SEC) has granted brokers in the US a 30-month no-action relief period from MiFID II’s research rules. 

The relief means US brokers will be allowed to provide asset managers in Europe with investment research without complying with unbundling requirements under MiFID II. 

SEC chairman, Jay Clayton, explained the no-action relief was designed with input from a range of market participants, as the authority looks to reduce confusion over cross-border compliance. 

“These steps should preserve investor access to research in the near term, during which the Commission can assess the need for any further action,” he said. 

Adam Sussman, global head of market structure at Liquidnet, described the relief period as a ‘hollow victory’.

“The reality is that MiFID II is massively disrupting the global research industry,” he said. “The SEC’s narrowly crafted no-action letter is a hollow victory for the long-term viability of the brokerage research business. 

“The business model is going to face tremendous pressure over the next 30 months, by that time we may not need any additional action.”

For Vicky Sanders, co-CEO at RSRCHXchange, the relief period has come out just in time as the rules are set to sweep Europe as of 3 January this year.

“While the no action letter was widely anticipated, it has removed obstacles for both the buy and sell sides which had arisen as a result of the differing regulation in the US. 

“With the path cleared, the industry can push on with their MiFID II unbundling preparations,” she added.