MiFID II alert - payment for research

19 April 2016

How will asset managers fund investment research? Will Commission Sharing Agreements (CSAs) survive?

We have more clarity on these questions following publication by the European Commission of the long-awaited MiFID II Delegated Directive. Under MiFID II, managers must either pay for investment research themselves or by a separately identifiable charge. Contrary to ESMA’s final advice and a victory to industry lobbying, the Commission’s text allows funding for research to be collected alongside transaction commission. Therefore, subject to national implementation measures, we believe that CSAs can survive in some form, albeit with renegotiation and onerous upfront and ongoing transparency obligations on managers.