An overhaul of Eurozone financial-services rules going into effect next year will impact the way investors pay for analyst research, according to Bloomberg.
The action, known as Markets in Financial Instruments Directive, or MiFID, is designed to force money managers acting on behalf of individual investors or pension funds to pay separately for the research and trades services they get from banks.
It’s left the "buy side" figuring out whether to absorb or pass on the cost of buying research and the "sell side" trying to gauge what analysts should focus more on and how to price it right.
Under MiFiD, which starts in January, banks will spend more than $1 billion less on mass-produced research, opting to tailor research to specific companies, according to a report by McKinsey & Co.
This move to make markets more transparent will lead to job cuts among analysts, and undermines firms providing “consensus” estimates. The result could lead to loss of coverage for small- and mid-cap stocks, leading to more dramatic swings in stock prices. (Source: Bloomberg)
Articles are chosen for summary in this Market Intelligence blog based on newsworthiness in conjunction with The Infinite Loop themes. Any opinions and views expressed in the articles are generally those of the underlying author from the source listed, are not necessarily current as of the date of this blog, may change as market or other conditions change, and may differ from views expressed by Ivy Investment Management Company and its associates or affiliates. Actual investments or investment decisions made by Ivy Investment Management Company and its affiliates will not necessarily reflect the views expressed in the articles. These articles are distributed for educational purposes only and are not investment advice or a recommendation to purchase, sell or hold any specific security mentioned in the article or to engage in any investment strategy. Investment decisions should always be made based on each investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Securities discussed may not be suitable for all investors.