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The new European Commission MiFid II regulation is now in effect, as of January 3. Impacts on sell-side research firms’ business models, capital markets and public companies in Europe will be immediate. Repercussions will eventually affect similar institutions in the U.S., due to global competition in the capital markets. Anticipating when, how or how severe is the subject of professional debate.
MiFid II is meant to provide comprehensive reform and an integrated EU financial market. In the space of this blog, I will narrowly reflect on its mandatory unbundling of pricing and services aspects. The impacts of these will cause current Aftermarket research business and financial models to be under attack, in terms of the reason(s) for and actual purpose of sell-side analysts’ existence.
Sell-side analysts should take a good look at the rapidly growing mainstream investor interest in ESG / Sustainability, as it could provide a critical life-line to bring their syndicated research to a new level of purposeful differentiation and survival.