North American buysiders are now following the lead of their European counterparts and preparing for impending regulations affecting the way institutional traders will pay for research.
Independent broker ITG today released a survey where it posed several questions to buy-side traders about how they will contend with the looming Markets in Financial Instruments Directive II (MiFID II), a sweeping set of European Union financial regulations scheduled to come into force on January 3, 2018.
Under MiFID II rules, asset managers will be required to explicitly separate, or “unbundle,”their trading commissions from investment research payments. In order to continue paying for research alongside executions, asset managers will be required to set up a research payment account.
While MiFID II has been a primary concern for European traders, now traders in North America are facing the new regulation and making battle plans on how to comply with it. The ITG survey polled more than 100 buy-side professionals who participated in an ITG webinar on the impact of MiFID II regulations on North American asset managers. Respondents — hedge funds and long-onlys — were institutional investors with assets under management ranging from $125 million to more than $1 trillion, with average AUM of $47 billion.