ANEW YEAR often begins with a headache. For asset managers and brokers, last year’s pain was intensified by the European Union’s revised Markets in Financial Instruments Directive (MiFID 2), which came into force on January 3rd 2018. Among other things MiFID 2 obliged fund managers (the “buy side”, in industry argot) to pay brokers (the “sell side”) separately for investment research, rather than receive it bundled with trading services.
Twelve months on, predictions that the directive would squeeze research spending and brokers’ revenues, and hasten market concentration, look broadly correct. In a report in November, consultants from McKinsey noted that sell-siders’ commissions from equity trading in Europe had fallen by 30% in a year. Recent signs of consolidation include the purchase by AllianceBernstein, a fund manager and research firm, of Autonomous Research, an independent analysis firm, and numerous takeover…
