Are you tired of hearing about MIFID II already?  So am I.

We are being inundated with articles, posts, comments, and blogs about MIFID II.  What’s worse?  The industry is blowing it entirely out of proportion.

Though it pains me to go into it, even for a bit, I want to take a moment to explain what MIFID II is to the fortunate readers who haven’t had to engage in it.

In a nut shell, regulatory bodies in Europe are requiring investment research providers to clearly define prices for investment research services – and the thought is, it might be implemented in the US as well.

You mean, asset managers should know what they are paying for and how much it costs?  Heaven forbid.  But, yes.  That’s what MIFID II is seeking to achieve.

Here are the questions I have:

  • Why is this blowing everyone’s mind?
  • Don’t you usually operate that way?
  • Don’t you know exactly how much you pay for products and services in every other aspect of your life?

When you approach the checkout counter at Wal-Mart© with socks, flip flops and water, do they give you a total based on what they THINK you’re purchasing, or does each item have its own price?  Obviously, it’s the latter.

Well, that’s what MIFID II is asking investment research providers to do.  Clearly have the price displayed on the shelf so asset managers know exactly what they are shopping for.

Is this a revolutionary way of thinking?

No.  Not really.

Here’s my take.

MIFID SHMIFID! 

I believe asset managers deserved this level of service from the start.  Unfortunately, it takes something like MIFID II to highlight the need for more transparency.

Fact is, there are many justifiable reasons why pricing has not been properly addressed, and responsibility for the lack of clarity falls on both sides.  But, now is the time for investment research providers to act, showcase their strengths, learn from their peers who have experience in pricing investment research and come up with a plan.  We can help.

Here’s what we @ Differentiated Research know.

Asset managers already have budgets…

…so they should use them!  Better believe there is a price in mind when an asset manager wants a deep dive on Australia, for example.  We make it possible for asset managers to test their own investment research provider network and see what comes back.  Learn how.

Asset managers have existing relationships with investment research providers.

…and now is not the time to over-complicate them.  You can find numerous ‘end-to-end’ solutions that are MIFID II compliant.  Some of them are downright daunting.  Where do you start?  My advice is, before you leap, take a moment to investigate the effort required to switch your investment research systems over to a MIFID II compliant solution.  If it’s seamless to do so, then it probably makes sense to jump.

My position remains one of simplicity.  If your investment research process works minus a few tweaks, find a solution that helps you move forward with minimum disruption and cost.  Take a stock before making a change of significant magnitude.  And remember…simplicity wins!

I am a research advocate.  If you are unsure whether your firm is on the right track to becoming MIFID II compliant, reach out – we can help.