POTENTIAL IMPACT OF MIFID II ON IR PRACTICES AND THE CORRESPONDING ROLE OF TECHNOLOGY
MiFID II will come into force on 03 January 2018 and EU states have until 03 July 2017 to transpose it into national laws. This paper aims to provide IR professionals with more clarity on the likely implications of MiFID II, specifically sell-side research and corporate access, as well as ways they can evolve their practices to make the most of new opportunities.
One of the challenges for IR professionals will be to deal with potential changes in research coverage, impacting how equity stories and investment cases are disseminated and debated amongst market participants. Though MiFID II establishes a strict framework for how the buy-side can pay for sell-side research using client monies, what actually constitutes research could be subject to conflicting interpretations within the EU.
This could have a direct impact on corporate access practices. For example, the UK has reaffirmed its stance that corporate access is not research and is not therefore commissionable, whereas France is, at it currently stands, envisaging instances where access can constitute research. Different rules in different countries can represent another challenge for IR professionals, as their interactions with investors know no borders.
Technology presents a unique opportunity to evolve with these changes to regulation, while remaining cost effective. New research distribution and corporate access platforms are being established in response to changes in market practices and it is anticipated that these will gain in importance and acceptance as MiFID II comes into force.
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