Since the implementation of MiFID II in Europe, the financial industry has been experiencing significant changes in the way research is paid for and consumed. One of the key aspects of MiFID II is the unbundling of research and execution costs, which has had far-reaching implications for market participants. As these changes continue to reverberate across the global financial landscape, uncertainty looms over how the U.S. research market will be impacted.

MiFID II Research Unbundling: Implications for the U.S.

The unbundling of research and execution costs under MiFID II has created a new paradigm for how research is valued and paid for. In the U.S., where the practice of bundling research costs with trading commissions has been the norm, the shift towards unbundling has raised concerns among market participants. With research now being treated as a separate and distinct service, asset managers are faced with the challenge of reevaluating the value and quality of research they receive, as well as the cost associated with it.

Uncertainty Looms as MiFID II Regulations Impact U.S. Research Market.

As the impact of MiFID II regulations continues to unfold, uncertainty looms over how the U.S. research market will adapt to these changes. Market participants are grappling with questions about how research will be priced, how budgets will be allocated, and how the quality of research will be ensured in this new unbundled landscape. Additionally, there are concerns about the potential for a two-tiered market to emerge, where only the largest asset managers have access to high-quality research, while smaller firms struggle to compete.

As the effects of MiFID II research unbundling spread uncertainty to the U.S., market participants are facing a period of transition and adaptation. The shift towards unbundling research costs from execution costs has the potential to reshape the way research is valued and consumed in the U.S. market. It remains to be seen how asset managers, research providers, and regulators will navigate these changes and ensure that the integrity and quality of research are maintained in this new environment.