Impact of MiFID II after 11 weeks

Many market participants expected MiFID II to start slowly as the regulations rolled out over the course of this year.  Many companies also have been talking about ‘business-as-usual’ with many in ‘wait-and-see’ mode.  Now that a quarter has passed, what is the reality?  Particularly from the buy-side’s perspective.

To help answer this question, we interviewed a sample of 50 European-based portfolio managers during the 11th week after MiFID II (March 19-23, 2018).  Their answers painted a picture suggesting more revolution than evolution.  The buy-side is clearly experiencing significant change already and it’s clearly not ‘business-as-usual’.

The results show:
  • Access has been negatively affected
  • Investors have already reduced the number of brokers they are dealing with for both equity research and Corporate Access
  • Cutbacks in research providers is already leading to restricted access to conferences and non-deal roadshows
  • Price discovery for research is evolving quickly
  • The risks of companies and investors ‘missing’ each other during roadshows has increased
  • Interesting (and worrying) divergence appearing between the communication lines issuers-to-shareholders and issuers-to-non shareholders
  • Buy-side is contacting more companies directly and would like company IR teams to also do more themselves
  • Investors are strongly in favor of an independent model for providing Corporate Access
  • Bureaucracy has increased with all interactions being logged
  • Surprisingly, some buy-siders are reporting poor responsiveness from some IR teams
The changes started pretty immediately in January with many buy-siders issuing “cease and desist” style emails to the sell-side asking them to stop sending research unless they have a contract in place.  For example, typical emails were as follows:


Our research sample was as follows:


Has the number of meetings changed?


What do investors want?
twitterlinkedinmail

Leave a Reply

Your email address will not be published. Required fields are marked *