Large asset managers in Europe likely to absorb MiFID research cost
The operating profits of asset managers in Europe could fall by 17-29% as a result of research unbundling, according to S&P Global. The analysis by S&P suggests that most large European asset managers will absorb research costs once MiFID II comes into effect to avoid the additional work required to adopt research payment accounts.

European asset managers’ operating profits could decline 17 to 29 per cent because of research unbundling required under Mifid II, analysis by S&P Global has found.

Crisil, an S&P company, believes most large European asset managers will absorb research costs, rather than adopting research payment accounts, which it describes as a “strenuous” process.

The cost of RPAs can be borne by investors but involves additional disclosure, budgeting, reporting and auditing.

The analysis anticipates a 17 per cent hit to operating profits for an asset manager with 35 per cent exposure to equities and with 80 per cent of equity costs absorbed by the firm, while 20 per cent is borne by brokers.

However, in asset managers where 40 per cent of assets are in equities and all research costs are born by them profits could take a 29 per cent hit.