Cub Scout’s Motto
The ESMA announcement came and went. Disappointingly, research was noticeable by its absence. Despite yet another delay, the majority of buyside firms recognise that a tidal wave of change is coming and are continuing on as planned; developing their new research consumption strategies.
The upcoming regulatory change has been a catalyst for firms to review what can often be their second biggest line item - research spend. Research is used across firms - by generalist PMs, sector specialists, asset allocators - and across asset classes - equities, fixed income, commodities, currencies and real estate. Distribution has been highly fragmented and sources plentiful. As a result, maintaining centralised oversight has proven difficult. Firms are currently reviewing how fund managers find content and providers, how the research comes into the firm and how the firm itself monitors and evaluates consumption.
A delay to the final clarity of the research rules hasn’t deterred the overwhelming majority of buyside firms from continuing down this path. The outstanding debate surrounds the use of commissions to fund Research Payments Accounts - it’s a very important issue but one that is primarily operational. Put another way, there is still a lot of work to be done before broaching the commission issue.
Just as the delays came without warning, it’s possible that an update could come unannounced ahead of the European Commission’s release of the Delegated Acts in November/ December.