SEC deal shows MiFID II will transform global research market

Russell Napier, co-founder of ERIC (Electronic Research Interchange): “The SEC’s decision to grant a temporary relief permitting US firms to be paid for investment research is symptomatic of a sea change which will extend globally.

“The transformation of brokers’ relationships with their clients is as much about evolving behaviours as the EU’s new legislative regime. While MiFID II is no doubt the catalyst, the behavioural change it has inspired in organisations – particularly evident in decisions to assume research costs onto the P&L – will filter through to other markets.

“Given that the US and EU together account for 75% of global capital markets, it is only a matter of time until global and local players in other jurisdictions adopt practices that allow them to unbundle research costs. We are already seeing ripples of this impact in Asia and expect Japan, as one of the world’s largest financial markets, to soon follow suit.

“Once change of the kind we are seeing takes hold, market participants have very little choice but to reform the way they do business to remain competitive. Despite the implementation challenges, we expect MiFID II to drive positive organisational change, including outside of the EU, for many years to come.”