MiFID II Reaches Across the Pond: Is This the Calm Before the Storm?

MiFID II Reaches Across the Pond: Is This the Calm Before the Storm?

Despite the view that MiFID II is a European regulation, US investment managers are experiencing disruption as they align their research payment and execution practices with the influential standard.

While MiFID II went into force on Jan. 3, 2018, US money managers of all types and sizes anticipate that MiFID II will influence their businesses, not just this year, but over the next year or two, according to a recent Tabb Group webinar.

Already larger firms have been unbundling research and execution fees, quantifying the value of research, and shifting equity trades from more expensive sales desks to algorithmic trading. And, many are focusing on transaction cost analysis (TCA), broker algo reviews and venue routing analysis to justify their broker selection and venue choices.

These trends emerged in the latest equity trading report by Tabb Group where 87% percent of buy-side firms surveyed expect to be impacted by the MiFID II regulation either directly or indirectly — a significant increase above the 76% who felt this way in 2017 and 68% in 2016.

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