New platform emerges to help firms buy MiFID II-compliant research
Chris Hamblin, Editor, London, 21 September 2015
Some shrewd operators are offering to help asset managers to purchase research in a way that will comply with the European Union's second Markets in Financial Instruments Directive when the European Securities and Markets Authority's “unbundling” policy comes into force.
The first such firm to do this, in anticipation of the ESMA technical guidelines that are expected later this month, is RSRCHXchange which has launched an online marketplace for institutional research.
There is plenty of debate in the financial sector about what the “unbundling” of research and execution payments might bring. It is definite, however, that MiFID II will require all research to be unbundled, valued, priced and paid for transparently and fully audit-worthy. ESMA will clarify MiFID II technical standards in the early autumn and enforce them in January 2017, will require all research to be unbundled, transparently valued.
The idea of buy-side firms searching for and buying a wide range of multi-asset, non-broker research on a single, sophisticated platform that fits into existing work-flow processes seems to be a new one.As time runs out for unprepared asset management firms, it is possible that more and more of them will turn to software products such as this one, and that more such products will appear on the market.
The founders of the new online exchange claim that users can use it to buy research in the same way that people buy music or books online, in an “unbundled” manner. They hope to modernise the way in which “buy side” users interact with research, noting that the traditional research procurement model is cumbersome, complex and costly as the job of finding the best research providers and accessing their content is time-consuming and “low tech.” Compliance, oversight, due diligence and record keeping are all essential but mostly manual and fragmented. The new exchange hopes to improve the number of clients the user can reach while easing his administrative burdens and speeding up payment terms.
Vicky Sanders of RSRCHXchange told Compliance Matters: “For the first time, asset managers can search within the aggregated content from multiple sources and buy the research they need in real time. They can measure and manage their research consumption effectively, with absolute confidence in the due diligence and compliance checks of every provider. Furthermore, the platform allows asset managers to buy what they need, from any source, when they need it and use a variety of hard- or soft-dollar payment mechanisms.
“We are launching it with more than 50 research providers and a number of prominent buy-side clients on board already, bringing valuable research content to the platform.”