Buy-side Survey: Impact of MiFID II on investment research
Welcome to the Survey 'Impact of MiFID II on Investment Research'
Introduction
Your participation is much appreciated!
If you have questions, please email admin@riskcontrollimited.com. The survey is available online until 15th June 2019.
Risk Control is conducting this survey on behalf of the European Commission (DG FISMA). The survey will be summarised in a study that Risk Control is preparing for the Commission entitled 'Impact of MiFID II Rules on SME and Fixed Income Investment Research'. Information on the European Commission tender award associated with this project may be found here.
It is expected that the report will be published after the project is completed in September 2019.
Data Confidentiality Notice
The results of the project will be included in anonymised and aggregated form in the final report. The identity of respondents to the survey will be known only to the Risk Control team involved in verifying the quality of the data and will not be reported to any body outside Risk Control. Data will be employed only as inputs to the study for the European Commission and all copies will be destroyed once the project is complete.
Session management
The surveys must be completed within a single browser session. When you have completed the survey, click the submit button and your data will be included in the survey. If your browser session ends before you have completed the survey, you will have to re-submit your data. If you wish to prepare your answers offline, you may find it convenient to use the PDF version of the questions that can be found here. You should then type your prepared responses into the online version of the survey.
Definitions
On the sell side, we distinguish between:
Global banks or investment banks (we define this based on the EU top ten equity underwriting institutions, namely Goldman Sachs, JP Morgan, Morgan Stanley, Citi, Bank of America Merrill Lynch, Deutsche Bank, UBS, Barclays, Credit Suisse, BNP Paribas) Large banks or investment banks (defined as banks with assets greater than EUR 200 bn other than those listed above and investment banks other than those listed above) Mid-sized and small banks (defined as banks with assets below EUR 200 bn) Global non-bank brokers (or brokers with non-significant banking activities) (defined as a non-bank broker active in multiple countries and with a broad international focus) Other brokers Large Independent Research Providers (IRPs) (30 employees or more) Other IRPs (fewer than 30 employees).
We define Small and Medium Enterprises or SMEs to be firms with market capitalisation less than EUR 1bn.
In this sense, SMEs are a combination of Small Caps (EUR 200 mn to 1 bn), Micro Caps (EUR 50 mn to 200 mn), and Nano Caps (less than EUR 50 mn).
We define
• Large Cap firms are those with equity market capitalisation greater than EUR 5 bn
• Mid Cap firms are those with equity market capitalisation between EUR 1 bn to 5 bn
The term "Research" as used in the survey is defined in the broad sense not just "investment research" produced by a "research department". "Research" here also means telephone, email and face-to-face interactions as well as written research.
"Credit research" is defined to include research covering corporate bonds and securitisations but not research related to instruments issued by sovereigns or public sector entities.
Thank you!
Click Next to begin!
Identification
1. What is the name of your firm? *
This question is compulsory. The firm name associated with your survey response will be treated confidentially and will not be revealed
to anyone except the Risk Control team that checks the data quality of responses prior to them being collated and presented in an aggregated, anonymised form.
2. Please provide a contact email address. *
This question is compulsory. The email address will be used only to confirm the identity of the firm that has submitted the response to ensure
data quality. It will not be revealed to anyone outside the Risk Control team that checks the data quality of responses prior to them being
collated and presented in an aggregated, anonymised form.
Broad description of buyside firm
3. In which country is your firm domiciled?
Argentina Australia Austria Bahrain Belgium
Brazil Bulgaria Canada Chile China Croatia Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Iceland India Indonesia Ireland Israel Italy Japan Kuwait Latvia Liechtenstein Lithuania Luxembourg Malaysia Malta Mexico Netherlands New Zealand Norway Oman Peru Philippines Poland Portugal Qatar Romania Saudi Arabia Singapore Slovakia Slovenia
Slovenia South Africa South Korea Spain Sweden Switzerland Taiwan Thailand United Arab Emirates United Kingdom United States Other
4. Please specify the country in which your firm is domiciled:
5. If your firm is domiciled in the EU, is it a subsidiary of a firm domiciled outside the EU?
Yes
No
Not domiciled in the EU
6. If your firm is domiciled in the EU and is a subsidiary of another firm, what is the domicile of your firm's parent?
Not applicable Argentina Australia Austria Bahrain Belgium Brazil
Brazil Bulgaria Canada Chile China Croatia Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Iceland India Indonesia Ireland Israel Italy Japan Kuwait Latvia Liechtenstein Lithuania Luxembourg Malaysia Malta Mexico Netherlands New Zealand Norway Oman Peru Philippines Poland Portugal Qatar Romania Saudi Arabia Singapore Slovakia Slovenia
South Africa South Korea Spain Sweden Switzerland Taiwan Thailand United Arab Emirates United Kingdom United States Other
7. Please specify the domicile of your firm's parent: *
8. If your firm is domiciled outside the EU, does your firm have authorised European subsidiaries providing investment services to clients in the EU?
Yes
No
Not applicable
9. If your firm is domiciled in the EU, does it have one or more authorised subsidiaries outside the EU?
Yes
No
Not applicable
10. If you are not domiciled in EU, do you trade financial products through EU trading venues, or service EU clients directly / indirectly via sub-advisory
agreements with EU firms that are subject to MiFID II?
Yes
No
Not applicable
11. What is the size of your firm’s Assets Under Management (AUM)?
Choose one of the following options (in EUR, billions):
AUM > 500
100 < Aum <= 500
50 < Aum <= 100
10 < Aum <= 50
5 < Aum <= 10
1 < Aum <= 5
0.5 < Aum <= 1
0.2 < Aum <= 0.5
0.1 < Aum <= 0.2
AUM <= 0.1
12. What is the size of the Assets Under Management (AUM) of the group of companies to which your firm belongs?
Choose one of the following options (in EUR, billions):
AUM > 500
100 < Aum <= 500
50 < Aum <= 100
10 < Aum <= 50
5 < Aum <= 10
1 < Aum <= 5
0.5 < Aum <= 1
0.2 < Aum <= 0.5
0.1 < Aum <= 0.2
AUM <= 0.1
13. In which of the following asset classes do your funds invest?
Choose one or more of the following options:
Large Cap Equities
Mid Cap Equities
Small Cap Equities
Micro Cap Equities
Nano Cap Equities
Corporate Bonds
High-yield Bonds
Corporate Loans
Securitisations
Other
14. If you invest in SME (Small/Micro/Nano Cap) Equities, do you have specialised funds designated as such for this purpose?
Yes
No
15. If you invest in High-yield bonds, do you have specialised funds designated as such for this purpose?
Yes
No
16. Which of the following best describes your firm?
Asset manager
Hedge fund
Pension fund
Insurance firm
Private bank
Family Office
Other
Research budget, organisation, budgets, research staff, costs of external research, comparison EU/US, trends pre/post MiFID II
17. Does your firm have a Research Department?
Yes
No
18. Which areas of research are the most important for your business?
Choose one or more of the following options:
Macroeconomics
Fixed Income (non-Credit)
Credit
Large or Mid Cap Equities
Small/Micro/Nano Cap Equities
Analytics & Trading strategies
Other
*
19. By your estimate, how much were your firm's research budgets in 2017,
and how did research budgets evolve in 2018 and 2019?
Budgets in 2017 in EUR
Overall (internal and external)
External research
External research on Large and Mid Cap Equities
External research on SME Equities
External research on Credit
Internal research
Changes in Budgets
Percentage change from Percentage change from
2017 to 2018 2018 to 2019
Overall (internal and external)
External research
External research on Large and Mid Cap Equities
External research on SME Equities
External research on Credit
Internal research
20. How have the MiFID II unbundling rules induced your firm to change its own overall research activity?
Greater reliance Reduced reliance No change on on in
Internal research
Quantitative strategies
Passive strategies
Fundamentals-based strategies
21. What is the number of internal researchers within your firm for • Large and Mid Cap Equities? • SME Equities? • Credit?
0 to 10 to 50 to 200 to More than
10 50 200 500 500
Large and Mid Cap Equities
SME Equities
Credit
22. What is the percentage change in the number of internal researchers within your firm since January 2018 for • Large and Mid Cap Equities? • SME Equities?
• Credit?
Percentage Change
Large and Mid Cap Equities
SME Equities
Credit
23. Is the change in the number of your firm's internal research analysts since January 2018 above or below trend? • Large and Mid Cap Equities? • SME Equities?
• Credit?
Above Below Same as trend trend trend Unknown
Large and Mid Cap Equities
SME Equities
Credit
24. In your view, has the all-in cost of external research changed since January 2018 in the cases of • Large and Mid Cap Equity research?
• SME Equity research? • Credit research?
Increased Stable Decreased Do not know
Large and Mid Cap Equities
SME Equities
Credit
25. In your view, is comparable research offered by IRPs more or less expensive than that of brokers in the three cases: • Large and Mid Cap Equities?
• SME Equities? • Credit research?
IRPs more IRPs less Equally expensive expensive expensive Unknown
Large and Mid Cap Equities
SME Equities
Credit
26. In your view, is the all-in cost of comparable research from EU brokers more or less than the all-in cost of research from US brokers in the three cases
• Large and Mid Cap Equities? • SME Equities? • Credit?
EU brokers EU brokers more less Equally expensive expensive expensive Unknown
Large and Mid Cap Equities
SME Equities
Credit
27. In your view, is Equity research for EU SMEs more or less costly than for US SMEs?
More expensive in Europe
Less expensive in Europe
Equally expensive
Unknown
28. Which factors influence the relative cost across the two jurisdictions? An additional factor can be added in the last row.
Greater in Greater in Equal in two EU US jurisdictions Unknown
Degree of competition
Regulatory burden
Quality of research
Enter another option
29.
In your view, has the administrative burden of obtaining external research changed since January 2018 in the three case:
• Large and Mid Cap Equities?
• SME Equities?
• Credit?
Increase Decrease Stable Unknown
Large and Mid Cap Equities
SME Equities
Credit
If you wish, please provide text on what changes in the administrative burden have been most material for your business.
30. Have MiFID II inducement rules resulted in a change in the execution cost of trading for SME Equities?
Reduced execution costs
Increased execution costs
No impact
Unknown
31. Have MiFID II inducement rules resulted in a change in execution spreads for Credit securities?
Reduced spreads
Increased spreads
No impact
Unknown
Payment methods & legal aspects
32. How does your firm pay for research currently and how did it pay before MiFID II?
Before MiFID II Since MiFID II
P & L
RPA
Commission Sharing Agreement
Bundled method
Via spreads (for credit research)
33. Which of the following considerations has influenced your choice post MiFID II?
Choose one or more of the following options:
Competitive considerations
Taxation strategy
Regulatory burden
Administrative burden
Other
*
34. Is the choice between P&L and RPAs likely to affect the total cost to clients (including both direct and indirect charges)?
Yes
No
Unknown
35. If you have adopted the P&L method, have you adjusted your fees accordingly?
Yes
No
Unknown
36. If your firm pays for external research via RPA, how is the cost allocated between funds?
Prorated among all funds based on their size
Prorated by fund categories (equities, fixed income, etc.) based on their size
Other
37. Has your firm written guidelines for research cost allocation?
Yes
No
Not relevant
Unknown
38. Have you received sufficient guidance from your national regulators and ESMA on the application of the new rules?
Yes
No
Unknown
39. Does your firm have written contracts and agreements in place with your research providers?
Yes in all cases
Yes in most cases
Yes in minority of cases
No
Unknown
40. Has your firm taken any steps to stop receiving any unsolicited research?
Yes
No
Unknown
41. What steps has your firm taken?
Choose one or more of the following options:
Automatically blocked or filtered certain senders or materials
Requested a provider to stop providing research
Used the compliance function of the firm to monitor, assess and determine whether the material can be accepted before it reaches those parts of the firm that would make use of it
Provided adequate training or information to staff to ensure they understand the inducements obligations and the firm’s specific approach to receiving research
Established a process whereby staff can report to compliance or senior management any cases of unsolicited research
Other
*
42. Has the level of your firm's participation in investor roadshows changed since January 2018?
Increased participation
Decreased participation
No change in participation
Unknown
43. Does your firm find it challenging to distinguish which Corporate Access activities should be paid for and which are Minor Non-Monetary Benefits (MNMB)?
Yes
No
Unknown
44. Where does your firm apply the MiFID II rules on external research?
Choose one or more of the following options:
EU
Rest of Europe
US or Canada
Asia excluding Japan
Japan
Rest of the world
Availability, sourcing, evaluation of quality and actual use of research
45. How many investment research providers do you currently use overall and how many are brokers/independent providers/other entities within your own group?
Same question prior to the introduction of MiFID II in January 2018?
Total Brokers Independents Intragroup
Post-MiFID II
Pre-MiFID II
46. How many investment research providers do you currently use for Large and Mid Cap Equities and how many are brokers/independent
providers/other entities within your own group?
Same question prior to the introduction of MiFID II in January 2018?
Total Brokers Independents Intragroup
Post-MiFID II
Pre-MiFID II
47. How many investment research providers do you currently use for SME Equities (Small/Micro/Nano Caps) and how many are brokers/independent
providers/other entities within your own group?
Same question prior to the introduction of MiFID II in January 2018?
Total Brokers Independents Intragroup
Post-MiFID II
Pre-MiFID II
48. How many investment research providers do you currently use for Credit and how many are brokers/independent providers/other entities within your own group?
Same question prior to the introduction of MiFID II in January 2018?
Total Brokers Independents Intragroup
Post-MiFID II
Pre-MiFID II
49. Have MiFID II rules led you to change your consumption of research from Online Research Marketplaces (ORMs)?
Increase due to MiFID II rules
Decrease due to MiFID II rules
No
50. Have MiFID II rules led you to change your consumption of research from Broker Platforms?
Increase due to MiFID II rules
Decrease due to MiFID II rules
No
51. Of your current research providers, how many are domiciled in the EU?
Quantity
Large and Mid Cap Equities
SME Equities
Credit
52. Of the research providers you employed before January 2018, how many were domiciled in the EU?
Quantity
Large and Mid Cap Equities
SME Equities
Credit
53. Has MiFID II encouraged the emergence of new research providers for SME Equities (Small/Micro/Nano Cap) research?
Yes
No
Unknown
54. Which organisations have provided additional research for SME Equities?
Brokers
Independent Research Providers
Buyside researchers
55. Has MiFID II encouraged the emergence of new research providers for Credit research?
Yes
No
Unknown
56. Which organisations have provided additional Credit research?
Brokers
Independent Research Providers
Buy-side researchers
57. Which methods do you use to assess the value of research and what is their relative importance in your overall assessment?
1 (least) to 5 (most)
Judgement or Score Cards of Individual Managers
Numbers of Times Accessed
Use of Public Research Rankings
Broker Voting
Analyst Ranking
Enter another option
58. Has the quantity of research that your firm consumes on (i) Large and Mid Cap Equity, (ii) SME Equity and (iii) Credit changed since January
2018?
Increase in Decrease in No change in quantity quantity quantity Unknown
Large and Mid Cap Equities
SME Equities
Credit
59. Has the quality of (i) Large and Mid Cap Equity, (ii) SME Equity and (iii) Credit research changed since January 2018?
Increase in Decrease in No change in quality quality quality Unknown
Large and Mid Cap Equities
SME Equities
Credit
60. How have the following influences on SME Equity research quality evolved since January 2018? An additional factor can be added in the last row.
Increase No change Decrease Unknown
Number of analysts employed by research providers
Seniority of analysts employed by research providers
Depth and thoroughness of analysis
Increase in number of research providers
Enter another option
61. How have the following influences on Credit research quality evolved since January 2018? An additional factor can be added in the last row.
Increase No change Decrease Unknown
Number of analysts employed by research providers
Seniority of analysts employed by research providers
Depth and thoroughness of analysis
Increase in number of research providers
Enter another option
62. Overall, would you say that the MiFID II research unbundling rules have changed your access to research on EU SME Equities?
Rules have increased access
Rules have had no effect on access
Rules have reduced access
Unknown
63. If you answered "Rules have increased access" or "Rules have reduced access", did this affect your investments in EU Small and Micro Caps?
Yes
No
Unknown
64. If you answered "Rules have increased access" or "Rules have reduced access", did this affect the performance of your funds?
Negative impact
Positive impact
No impact
Unknown
65. Overall, would you say that MiFID II research unbundling rules have changed your access to research on EU Credit?
Rules have increased access
Rules have had no effect on access
Rules have reduced access
Unknown
66. If you answered "Rules have increased access" or "Rules have reduced access", did this affect your investments in EU Credit?
Yes
No
Unknown
67. If you answered "Rules have increased access" or "Rules have reduced access", did this affect the performance of your funds?
Negative impact
Positive impact
No impact
Unknown
Thank You!
Thank you for taking our survey. Your response is very important to us.