RBC and IHS Market collaborate on MiFID II research payment solution
12 September 2017 London
Image: Shutterstock
Royal Bank of Canada (RBC) and IHS Markit are pairing up to provide research payment account (RPA) services ahead of the second Markets in Financial Instruments Directive (MiFID II) deadline.
Research payments will be administered from RBC-maintained accounts, using IHS Markit’s RPA Manager, at the discretion of each individual firm.
Under MiFID II, set to come into effect on 3 January 2018, investment research must be bespoke to each institution, and investment firms must pay for research with their own funds, or through a separate designated account, which is charged to the client. Research fees also have to be separated from execution and trading fees.
Through the partnership, the RPA Manager will provide research budget calculation, tracking and allocation and managing funding of the RPA through direct debit or commission sharing agreements. It will also assist with reconciliation, reporting and document management.
RBC will provide expertise on CSA, while its bank status and AA- credit rating will allow it to hold and administer segregated accounts on behalf of buy-side firms.
Michael Aldridge, managing director at IHS Markit, said: “The wider market supports the importance of greater transparency around commissions and payments for research; however the operational and regulatory challenges of commission unbundling and fulfilment is a complicated endeavour that remains little understood.”
“We are delighted to work with RBC to provide a wholly integrated, scalable and, more importantly, transparent, RPA solution.”
Graeme Pearson, head of European equities at RBC Capital Markets, added: “As the countdown to the MiFID II deadline intensifies, the industry needs to be ready from an operational perspective to ensure asset managers can put in place effective RPA solutions.”
“IHS Markit has the proven technical capabilities to support the buy side, while our specialist RPA team, which will be managed independently from our traditional brokerage offering, will ensure safe, efficient and timely processing of research payment obligations.”
Research payments will be administered from RBC-maintained accounts, using IHS Markit’s RPA Manager, at the discretion of each individual firm.
Under MiFID II, set to come into effect on 3 January 2018, investment research must be bespoke to each institution, and investment firms must pay for research with their own funds, or through a separate designated account, which is charged to the client. Research fees also have to be separated from execution and trading fees.
Through the partnership, the RPA Manager will provide research budget calculation, tracking and allocation and managing funding of the RPA through direct debit or commission sharing agreements. It will also assist with reconciliation, reporting and document management.
RBC will provide expertise on CSA, while its bank status and AA- credit rating will allow it to hold and administer segregated accounts on behalf of buy-side firms.
Michael Aldridge, managing director at IHS Markit, said: “The wider market supports the importance of greater transparency around commissions and payments for research; however the operational and regulatory challenges of commission unbundling and fulfilment is a complicated endeavour that remains little understood.”
“We are delighted to work with RBC to provide a wholly integrated, scalable and, more importantly, transparent, RPA solution.”
Graeme Pearson, head of European equities at RBC Capital Markets, added: “As the countdown to the MiFID II deadline intensifies, the industry needs to be ready from an operational perspective to ensure asset managers can put in place effective RPA solutions.”
“IHS Markit has the proven technical capabilities to support the buy side, while our specialist RPA team, which will be managed independently from our traditional brokerage offering, will ensure safe, efficient and timely processing of research payment obligations.”
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