Axa Investment Managers, Insight Investment and Union Investment have joined the growing list of investment firms who will pay for broker research from their own pockets rather than charge clients.
The firms will pay the costs of securities research for clients under the revised Markets in Financial Instruments Directive, known as MiFID II.
Axa IM is to apply the principle across all its portfolios and funds, not just those in-scope under MiFID II.
Andrea Rossi, chief executive of Axa IM, said: “…in the context of MiFID II, from January 3, 2018, Axa IM will assume all costs associated to research, not only for our MiFID II accounts, but for all funds and all client portfolios globally, subject to local regulation.”
Hans Joachim Reinke, chief executive officer of Union Investment, said his firm’s decision was made after the completion of several in-house projects partly aimed at calculating future research costs.
“From the outset, our objective was that the total amount of future transaction and research costs would not be any higher than they are currently. We therefore anticipate that, following our decision, the total costs for our customers will be lower,” he said.
Adrian Grey, chief investment officer for active management at Insight, said Insight already made extensive use of its own research capabilities, but supplemented this with external research “where it makes sense to do so”.
“Under MIFID II, where we choose to use third party sources to supplement our own research, we will not pass those costs on to clients,” he added.
Deutsche Asset Management and Franklin Templeton Investments were the most recent firms to announce the same decision.
MiFID II enters force on January 3 though recent months have produced concerns that not all asset managers will be on time with compliance.
DST, a technology firm, recent found only a third of firms it surveyed were ready for MiFID II and other regulations. Political uncertainty was given as the cause.
In September, Liquidnet found that there was uncertainty that firms would meet the best execution element of MiFID II.
A significant challenge for fund managers and distributors has been to do with MiFID II’s ‘target markets’ element, which is intended to prevent mis-selling. But last week a UK body, called Tisa, issued a template for how firms can meet the challenge.
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