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US asset managers prepare for EU's MiFID II

06 January 2017

Certain funds outside EU required to separate trading commissions from investment research payments

Read more: MiFID II

The majority of North American asset managers plan to fully unbundle all of their brokers globally as a result of MiFID II, despite uncertainty as to whether the rules apply directly to them.

New York broker ITG polled 100 buy-side firms in the US at the end of last year,  gauging on MiFID II, a sweeping set of European financial regulations scheduled to come into force in January. 2018.

Under the rules, asset managers will be required to explicitly separate, or "unbundle", their trading commissions from investment research payments.

"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," said ITG’s head of global commission management, Jack Pollina.

"North American firms are anticipating these changes and are taking steps now to adapt to the changing expectations of their end investors."

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.

82% of North American firms plan to fully unbundle all of their brokers globally. However, only 43% of those polled expect MiFID II to have a direct impact on them.

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.

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