Mifid II research unbundling consensus grows, again

Added 13th September 2017

Deutsche Asset Management and Franklin Templeton are the latest firms to reveal they will take on the cost of research once Mifid II comes into force next year.

Mifid II research unbundling consensus grows, again

Joining a growing consensus within asset management, the two companies said they will take on the cost of third-party investment research for affected clients rather than pass it on in the form of higher charges.

Only a handful of managers including Schroders, Janus Henderson and Amundi have said they will pass costs on to clients.

Nicolas Moreau, head of Deutsche Asset Management and member of the management board of Deutsche Bank, said: “As we strive to deliver both certainty and transparency to our clients, I am pleased to announce that Deutsche Asset Management will absorb the cost of external research for funds under the new Mifid II directive.

“We strongly believe that our approach is the best possible solution to the requirements of the new directive and that it will allow us to remain fully committed to delivering market-leading solutions to our clients.”

European financial regulation

Unbundling guidance wrapped up in Mifid II gives firms the choice to pass the cost of research and analysis bought from brokers or banks on or cover it themselves.

Only a handful of managers including Schroders, Janus Henderson and Amundi have said they will pass costs on to clients.

The new European rules mean firms selling research will have to invoice separately for the work they do for clients from January 2018. The industry has been split over how best to confront the issue.

In a statement Franklin Templeton said: “We strongly believe that third-party research makes an important contribution to our internal research process and brings an independent perspective to challenge and enhance our own.”

Firms including Fidelity and BlackRock are among the asset managers yet to confirm how they will deal with research costs from January 2018 onwards.

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