Strategy
UK Investment Manager Says It Will Absorb MiFID II Research Costs

Deciding who will pay for investment research ahead of MiFID II is hot on the minds of money managers across the world.
T
Rowe Price International will absorb the price of third-party
investment research once MiFID II is implemented, the latest in a
string of money managers to outline how costs will be covered
once the European directive enters into force.
T Rowe Price Group, the parent group of the UK-based investment
manager, said yesterday it would pay for investment research as
of 3 January 2018 - when MiFID II takes effect - rather than pass
costs onto its clients.
“With this decision, we have ensured that our clients’ best
interests are protected while preserving our globally
collaborative investment process and our access to important
third-party research,” Rob Sharps, co-head of global equity and
group chief investment officer, said.
MiFID II, an acronym for second iteration of the European Union's
Markets in Financial Instruments Directive, will require money
managers for the first time to “unbundle” the costs of investment
research, separating them from service and trading
fees.
T Rowe's announcement comes amid a flurry of others made by
various asset managers, as each weighs up whether they or their
clients should pick up the bill for research.
Some larger firms, including
JP Morgan Asset Management, Jupiter, M&G and Aberdeen
Standard Life, have said they will also cover the costs.
However, there are concerns that the regulation risks pushing
smaller players to the wall as they could struggle to absorb the
costs and may have to pass them onto clients, potentially causing
them to lose business to larger rivals.
Meanwhile, some investment banks - which are often asset
managers' first choice for equity research - see an opportunity
to cash in on MiFID II.
Barclays, for example, has quoted some small-and medium-sized
clients $450,000 for firm-wide access to its premium research
offering. JP Morgan is reportedly proposing to charge
as little as $10,000 a year for equity research - the lowest
price to emerge so far.
Last week,
Bank of America was tight-lipped when probed by this
publication about media reports it was planning to charge asset
managers up to $80,000 a user per year for full research
services.