Europe Rules on Bank Research Seen Biting U.S. Fund Managers

  • 66% on buy side see Europe MiFID II reaching them, report says
  • Survey of 100 money managers see transparency as challenge

U.S. money managers are bracing for the fallout of looming financial regulation in Europe.

That’s according to a report by research firm Tabb Group LLC, which found that 66 out of 100 hedge fund and asset managers surveyed expect Europe’s vast regulatory overhaul to change their American business, too, even if similar rules never make it to the U.S. That’s up that’s up from 38 percent last year, according to the report, which was released Wednesday.

The Tabb report specifically focused on the European Union’s plans to separate research from execution spending. The EU’s revamp of market rules known as MiFID II, expected to go into effect in January 2018, is part of regulatory efforts to prevent another financial crisis. The rules are designed to shift trading onto exchanges where regulators can better track it, boost transparency to protect individual investors and level the playing field for professionals.

The plans will reach U.S. money managers who will have to, among other things, provide more detailed reports on research spending and how they choose brokers, according to the survey.

“The biggest impact that is going to bite everybody in the butt is the reporting requirements,” said one large asset manager quoted anonymously in the report. “It’s a real challenge to have clean data dictionaries and, going from there, it’s getting to either developing things internally or farming it out.”

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