MiFID driving 20% cut in EU funds' external research budget

(Bloomberg) According to a survey of fund managers conducted by US consulting firm Greenwich Associates, European fund managers have cut their 2018 investment research budgets by 20% in response to MiFID II. The firm assessed the shakeup to the multi billion-dollar market for research under the European Union law that started 3 January. The law requires asset managers to separate payments for investment research from those for brokerage services to execute trades.

The decline in spending from last year prompted by the revised Markets in Financial Instruments Directive, or MiFID II, is largely driven by more selective fund managers buying research from a smaller number of banks, according to the survey. For those who "make the cut," there’s encouraging news: the amount budgeted for each provider will remain relatively flat.