Banks can respond to unbundling by tactically changing the way they produce research, cover their costs and cover the coverage of distribution between FICC and equities. But with potential revenue losses of $1.5 billion and a new run on positions between banks and independent companies, research providers are entering a critical phase. Over time, however, this regulatory change is also likely to have policy implications. The total amount of research consumed is likely to decrease, and those who bear the current $5 billion in research costs are likely to change as well. In a move not reported in the initial consultation, the FCA clarified that macroeconomic research could not be included in the FICC exemption and should therefore continue to be treated as a paid research service. The FCA`s reasoning is that macroeconomic research can explicitly or implicitly suggest an investment strategy. It can often support both action strategies and the FICC. Providers and providers of research results must be ready to respond to a market that can adapt quickly during 2018 and evolve towards a more concentrated and heterogeneous competitive structure. Research on unbundling is expected to increase economies of scale on both the buying and selling side and put pressure on medium-sized players. But it will also create opportunities for specialized models that can offer what large companies can`t. The effects of decoupling research from the buy and sell side The new FCA rules remove certain categories of research services from the incentive rules of COBS 2.3A by treating them as «minor non-monetary benefits».

In other words, these can be provided «free of charge» or bundled with enforcement services without being considered an inducement (which would be prohibited). The exempted categories are as follows: [1] For listed companies, the market capitalisation threshold is calculated by reference to the year-end prices of the previous 36 months preceding the provision of the research. For unlisted companies, companies can reasonably rely on third-party market capitalization estimates. The FCA appears to have placed very little emphasis on a perceived benefit of maintaining equivalence with EU MiFID rules. A prime example is the FCA, which sticks to the market capitalisation threshold of £200 million for small businesses, compared to €1 billion for the EU. According to the FCA (and this was confirmed by statistical analysis during its initial consultation), the problems of research coverage are really evident in this much smaller group of companies. We expect this trend of regulatory divergence to continue for the foreseeable future. We find this distinction unnecessary: macroeconomic research involves a very large part of the research in support of retirement, exchange rate and commodity strategies, and the decoupling of these elements might be virtually impossible in practice.

We already know that a major investment bank is proposing to maintain existing trade agreements in these sectors. The new exemptions for research will apply from 1 March 2022. For companies that have an annual research budget, this leads to an unfavourable period of two months before the categories concerned can be excluded. For more information on the impact of MiFID II on search unbundling, download the full report. If you have any questions or would like to discuss your company`s individual compliance issues with our team, fill out this form or call +44 (0) 20 7042 0500. The priority of the management teams for the remainder of 2017 is to ensure operational readiness and negotiate new relationships and commercial agreements. Our discussions with industry suggest that there is still a lot of work to be done to ensure a smooth transition, and that there is still much to be played as companies compete for positions. [2] «Open Available» means that there are no barriers or conditions to be obtained, such as logging in or submitting user information, before access is granted. We review your compliance program based on what is expected of businesses of their size, type and complexity. At the end of our review, we will issue recommendations and a summary to senior management demonstrating your compliance with this ongoing regulatory amendment. FINRA issued Regulatory Notice 22-23 to highlight the benefits of Registered Agent (RR) succession planning for clients, member firms and agents themselves. The removal of these obligations entered into force on 1 December 2021.

As a result, companies that are required to file the next RTS 27 and 28 reports in April 2022 are no longer required to do so. While there is no explicit reference to this in the FCA`s policy statement, we believe that any previous information from previous years can be removed from the companies` websites. The FCA has confirmed that the following disclosure requirements no longer apply: The unbundling of research comes at a time when pressure on investment managers` fee structures is increasing as many managers look to scale up and increase profitability. Search service providers that provide access to high-quality content at competitive prices will be well positioned to meet their needs. Investment managers are also stepping up their efforts to demonstrate differentiated performance, which will drive demand for access to insightful content from providers with a real advantage. CAF published on the 30th. In November 2021, policy statement PS 21/20 on changes to the conduct and organisation requirements of the UK MiFID, confirming the FCA`s proposals in consultation paper PC 21/9. ACA can provide your company with compliance audits, mock audits or gap analyses to identify regulatory gaps, deficiencies or weaknesses and reduce organizational risks. With many operational milestones to go through and uncertainty about the scale and speed of change, few people will take bold strategic action until 2018.