MiFID II: One Year On

Assessing the Market for Investment Research

Learn how brokers feel about MiFID in 2019 from CFA Institute’s One Year After MiFID II survey. Understand how the MiFID II regime has impacted investment research budgets.

MiFID II: One Year On

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In the months leading up to the introduction of MiFID II in January 2018, industry professionals observed a general trend toward firms opting to pay for research (charged against the firm’s profit and loss) as opposed to charging clients. This observation was corroborated in our 2017 survey data. One year on, these survey results affirm that trend. The clear majority of respondent’s firms pay for research, which holds true across all size categories in terms of assets under management.

Our findings show that asset managers are overwhelmingly absorbing research costs against their profit and loss and scaling back research budgets accordingly. The decline in research budgets increases with the size of the firm, and larger asset managers are more likely and able to move research production in-house as they scale back reliance on external providers.

Perhaps the most directly observable drawbacks are the perceived reduction in research quality and coverage, particularly for small- and mid-cap equities, which if sustained, could hurt liquidity and capital formation in that sector. The findings suggest that research provision is retrenching and focusing on the large-cap segment with fewer sell-side analysts employed.

On the positive side, however, investment professionals perceive the research marketplace to be more competitive overall, which perhaps reflects the extent of cost pressures and changes to research pricing, at least in the short run. Overcapacity in the supply of research is being removed, but it is an open question as to whether an equilibrium has been found that serves the best interests of end-investors.


CFA Institute conducted a survey of its European members between 6th and 19th December 2018. The survey was sent to a sample of 12,633 members in the European Union, the United Kingdom and Switzerland. In total, 496 responses were received, for a response rate of 4% and a margin of error of ±4.3%. Respondents came from 449 different firms across 25 different European countries.

The top 4 occupation categories represented are portfolio manager, research analyst, C-suite (Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Investment Officer (CIO), and financial adviser/wealth manager. Collectively, these core investment management job functions account for 60% of respondents.

Key Findings

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