MiFID2 and Steve Jobs
When I think about MiFID2, one picture comes to mind: naked people...
Noone of us can predict exactly how the Equities business future will look like but we know this time it's different and highly disruptive.
Our MIFID2 survey that we have just released in partnership with EY highlights some insightful trends about this major regulatory change. Let me share with you one of them that I find particularly interesting: Post MiFID2, investors plan to modestly reduce their spending on research but significantly cut the number of providers they use and be more selective.
What does it mean for Corporate Access? 75% of the investor respondents to our survey also say they plan to include corporate access in their advisory budget. It sounds like a positive news for all the stakeholders but will investors be able (or willing) to take meetings offered by brokers with whom they don't have a research pricing agreement? It's probably the question I am the most frequently asked by Investor Relations. Some of them are even thinking about organizing their roadshows by themselves.
If I were Investor Relations, I would think it is a sensible option for roadshows focused on main shareholders who I already know very well. But if I was asked by my CEO to study new opportunities and expand the shareholder basis in a specific region, then I would probably be a bit more cautious.
Market intelligence in this matter is gold and nothing replaces the day-to-day access to the market. Given the importance of investor relationships to organising quality roadshows, I would probably prioritise brokers with strong research franchise, that's for sure. Why ? Because in the MiFID2 world where investors will probably cut their broker lists dramatically, high-quality research providers are much more lileky to strenghten their investor knowledge and access.
MiFID2 is a hugely disruptive force for our industry, that's for sure, but there is something that will not change, passion. Steve Jobs was right "The only way to do great work is to love what you do".
Founder & Managing Director at ingage IR
7 年I completely agree with you that high-quality research is critical and high-quality providers are likely to do well in the shake-out caused by MiFID II. I'm surprised though by the question of whether investors will be able to take meetings from brokers with whom they don't have a research pricing agreement in place. From a regulatory perspective the answer is crystal clear: definitively, yes. Under the rules research is not corporate access, and there cannot be any link whatsoever between payment for research and provision of corporate access. As per ESMA's guidance, these must be provided as entirely discrete services and separately priced at true commercial levels. Any buy-side house receiving, or sell-side house providing, corporate access meetings to research clients without an explicit, separate, commercial fee for the access service would be waving a big red flag to regulators inviting enforcement action. This is especially important in the UK where the new Senior Managers & Certification Regime means those in charge bear personal responsibility. Brokers have an extremely important role to play in a post MiFID II world, in execution, research and in corporate access. High quality providers will thrive. But these services MUST be provided, and priced, entirely separately. And it goes without saying that technology also has a critical role to play in making this business more efficient, providing record keeping & reporting systems as required by the new regulations, and improving the process with new functionality such as real-time, direct confidential feedback.
Investor Relations | Technology | Investment Management
7 年Hi Benedicte, thanks for sharing, great post. Was your survey just focused on European buy-side or also US?