U.S. Managers Eye Unbundling


MiFID II’s research unbundling requirement is having a noticeable effect on the other side of the Atlantic as many US asset managers look to purchase broker research directly instead of through commissions.

“Some of this comes from global managers that are adopting a uniform approach across their organizations,” said Mike Stepanovich, CEO of Visible Alpha’s ONEaccess broker-valuation business line. “But some of this are people adopting it as best practices in regards to how they are going to manage their broker relationship going forward.”

Although Tier-2 and Tier-3 US-based asset managers do not have to comply with MiFID II, they can leverage portions of the directive as best practices, he added.

Mike Stepanovich,
Visible Alpha

“It is sensible enough for me to collect my interactions with my brokers, normalize them, and then use the results in my broker vote,” he said. “That is just a sensible way of running your broker-valuation. I think that it is emerging as a best practice.”

US-based asset managers that look to adopt de-linking broker research from broker commissions also can benefit from lessons learned from European asset managers as their counterparts must have their processes and procedures in place to meet MiFID II’s January 2018 deadline.

“There is no doubt that the intensity of the work we see in Europe is stronger than we see in North America,” he said.

At the end of 2016, Stepanovich noticed many asset managers researching which tools and platforms were available to help the firms make their procedures MiFID II compliant.

“I think people are looking to make a decision this quarter or in the next one because they want to have their implementations completed by mid-year if possible and then use the second half of the year to really to be testing, checking things out, and making sure that things work properly,” he added.

Related articles

  1. Daily Email Feature

    An Uneven Playing Field

    Lynn Strongin Dodds looks at why independent research providers (IRP) have not gained the foothold expected af...

  2. Rapporteur Danuta Hübner has published a report on the MiFIR review. 

  3. Trading Europe From ‘Across the Pond’

    ISDA warns on proposed changes to post-trade deferrals regime.

  4. Trade Reporting In Focus

    APARMA will focus on improving industry data quality, transparency and auditability.

  5. A select group of bulge-bracket brokers have gained market share.