UK Government plans to reverse the EU MiFID II ban on research bundling
11 July 2023 UK
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The UK Government’s plan to reverse the EU MiFID II ban on research bundling has been published in its recent Investment Research Review.
The proposed change aims to give clients the option to choose how they pay for the research they consume, whether bundled or unbundled, by removing the requirement on market participants to unbundle. This is currently contained in the EU’s MIFID II legislation.
The Investment Research Review, which was introduced by the Chancellor on 9 December 2022 as part of the Edinburgh Reforms, looks to drive growth and competitiveness in the financial services sector.
The Association for Financial Markets in Europe (AFME) has announced its support for the UK Government’s plans.
Adam Farkas, CEO of AFME, comments: “It should be noted that the investment research market is inherently international and further changes to the UK’s regulatory and legislative environment in this area should prioritise, where possible, alignment with other jurisdictions. It should also provide a level playing field for both UK providers and consumers of research competing with international counterparts.
“AFME notes that similar themes are being addressed in ongoing discussions by other policymakers, and it is important for the respective UK initiatives to take account of developments in other jurisdictions such as the US and EU.
“From our own analysis, AFME has found no evidence to support a causal link between the introduction of the unbundling rules and the pre-existing declining trend in small-to medium-enterprise (SME) research coverage. Among the numerous surveys and reports AFME has conducted on this topic, no respondents have identified the unbundling regime as a causal factor in declining SME coverage.”
In recent weeks, the AFME has also commented on The Financial Conduct Authority’s proposal to introduce a UK consolidated tape for bonds and equities as well as the European Commission’s proposal to introduce FIDA and update PSD2.
The proposed change aims to give clients the option to choose how they pay for the research they consume, whether bundled or unbundled, by removing the requirement on market participants to unbundle. This is currently contained in the EU’s MIFID II legislation.
The Investment Research Review, which was introduced by the Chancellor on 9 December 2022 as part of the Edinburgh Reforms, looks to drive growth and competitiveness in the financial services sector.
The Association for Financial Markets in Europe (AFME) has announced its support for the UK Government’s plans.
Adam Farkas, CEO of AFME, comments: “It should be noted that the investment research market is inherently international and further changes to the UK’s regulatory and legislative environment in this area should prioritise, where possible, alignment with other jurisdictions. It should also provide a level playing field for both UK providers and consumers of research competing with international counterparts.
“AFME notes that similar themes are being addressed in ongoing discussions by other policymakers, and it is important for the respective UK initiatives to take account of developments in other jurisdictions such as the US and EU.
“From our own analysis, AFME has found no evidence to support a causal link between the introduction of the unbundling rules and the pre-existing declining trend in small-to medium-enterprise (SME) research coverage. Among the numerous surveys and reports AFME has conducted on this topic, no respondents have identified the unbundling regime as a causal factor in declining SME coverage.”
In recent weeks, the AFME has also commented on The Financial Conduct Authority’s proposal to introduce a UK consolidated tape for bonds and equities as well as the European Commission’s proposal to introduce FIDA and update PSD2.
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