The US Securities Exchange Commission has issued three 'no action' letters on the subject of research unbundling after consulting various authorities in the European Union about the bloc's second Markets in Financial Instruments Directive.

The SEC claims that its action is designed "in response to concerns that investors could lose access to valuable research." Its letters - which British regulators are not allowed to issue under the terms of the Financial Services and Markets Act 2000 - set out procedures by which market participants will be able to comply with the research-related rules of MiFID II without let or hindrance from the SEC. Subject to various terms and conditions:

• broker-dealers may, for a time, receive research payments from money managers in hard dollars or from advisory clients' research payment accounts;
• money managers may continue to aggregate orders for mutual funds and other clients; and
• money managers may continue to rely on an existing 'safe harbour' when paying broker-dealers for research and brokerage.

The regulator's temporary refusal to take any action in these circumstances "is intended to provide the staff with sufficient time to better understand the evolution of business practices after implementation of the MiFID II research provisions" - code language for major confusion on the American side about MiFID II. More problems of this kind are bound to emerge as the world's great powers follow the example of the United States and publish ever-more aggressive and extraterritorial rules that threaten each other's business. During the period of no action, the SEC is going to gauge the effect of MiFID II's research provisions on the US research marketplace to see what to do next.

Patrick Shea, the head of global compliance at Cordium, told Compliance Matters: "The letters will enable some US-registered broker-dealers and money managers to breathe a sigh of relief when it comes to managing the unbundling of research. Although the investment management industry expected that the relief would come, the release of the no-action letters provides certainty as firms with US-regulated activities and an EU nexus confirm MiFID II readiness. MiFID II is a complex piece of regulation with a broad scope, and firms must ensure that they have closely explored all aspects and assessed relevant impact in order to feel confident that they will be compliant come January 3 2018."