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Regulatory Uncertainty Triggers Commission Sharing Stagnation

MPI Europe, the specialist financial services consultancy, publishes today the results of our annual market wide survey for brokerage commission sharing agreements.

The analysis of usage and trends in commission management indicates that the lack of clarity from regulators, in particular around MiFID II is causing confusion for both buy and sell side firms. This highlights that firms see regulation as an increasing risk to operating efficiently.  This uncertainty has seen firms placing some CSA activity on hold whilst they wait for clearer guidance.

Our research has once again attracted a strong response with almost 80 firms contributing, underlining the continued interest both in this survey and the topic of Commission Sharing Agreements. 

Key trends include:

Stagnation Amongst Current Market Participants - 50% of firms have indicated that they will not increase their CSAs in the coming year with uncertainty on the future of commission sharing identified as a major concern.

Greatest Risk Concern is Regulation – Regulatory concern is clear with over 68% of firms deeming regulation as a medium to high risk to Commission Sharing. This is reinforced by the finding that 57% of firms believe that changes to regulation around Commission Sharing Agreements will only be moderated “to a degree” by authorities.

Low Support for Additional Regulation – A majority (54%) of respondents believes the current level of regulation is adequate.  Interestingly, the remainder of respondents were almost evenly divided believing it was currently either too strict or too lax.

MPI surveyed a range of financial sector firms to understand the key trends, challenges and opportunities in the use of commission sharing agreements. The survey was conducted during June and September 2015 and received responses from almost 80 asset managers, brokers and research providers. This annual survey has run since 2010 and has shown strong and increasing interest year on year.