ITG (NYSE:ITG), a leading independent broker and financial technology provider, today released a survey of North American institutional investors about the likely impacts of the 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 (RPA).
The survey polled more than 100 buyside professionals who participated in an ITG webinar on the impact of MiFID II regulations on North American asset managers. The buyside firms that participated represent institutional investors with assets under management (AUM) ranging from approximately $125 million to more than $1 trillion, with average AUM of $47 billion.
- Direct Impact: Only 43% of asset managers expect MiFID II to have a direct impact on them. The regulations apply to asset managers with operations in the EU and may also impact asset managers who have sub-advisory agreements with EU investment managers or that sell and manage European mutual fund vehicles known as UCITS.
- Research Payments: 59% of those surveyed plan to continue paying for research using commission sharing arrangements (CSA), while 33% expect to use a combination of both CSA and RPA for payments and 8% plan to set up a new RPA ahead of the MiFID II start date.
- Unbundling Is Coming: While the majority of asset managers do not believe MiFID II applies directly to them, 82% of North American firms plan to fully unbundle all of their brokers globally.
Commenting on the survey findings, ITG’s Head of Global Commission Management, Jack Pollina, said “MiFID II is going to have a significant impact well beyond the shores of Europe, as institutional investors require asset managers to change the way they budget, fund, price and pay for research. North American firms are anticipating these changes and are taking steps now to adapt to the shifting expectations of their end investors.”
ITG is a leading provider of commission management services and offers both traditional CSA as well as RPA administration and aggregation services. ITG provides access to a network of more than 5,000 research providers, brokers and vendors worldwide, with client service, finance and operations teams in the U.S., Canada, Europe and Asia for a true global coverage model. ITG was ranked #1 for CSA service and execution quality among mutual funds and hedge funds in the 2016 Greenwich Associates U.S. survey. For more information about ITG’s commission management services and our MiFID II webinar about the impact of unbundling on North American asset managers, please contact firstname.lastname@example.org.
Investment Technology Group (NYSE:ITG) is a global financial technology company that helps leading brokers and asset managers improve returns for investors around the world. We empower traders to reduce the end-to-end cost of implementing investments via technology-enabled liquidity, execution, analytics and workflow solutions. ITG has offices in Asia Pacific, Europe and North America and offers execution services in more than 50 countries.