Research Spending with Big Investment Banks Due to Fall
Survation’s financial services research in collaboration with RSRCHXChange has found that nearly three out of four (73%) asset managers from hedge funds across the world expect a reduction in the amount of research sourced from the largest investment banks in the world. This drop is due to take place with the introduction of new regulations laid out by the EU, MiFID II.
The poll was conducted between the 12th September – 18th October 2016. Survation spoke to 234 respondents, all of whom work in financial services, making this piece of work, the largest study of the asset management sector of its kind.
Respondents were based in the UK, EU, wider Europe, US and other countries around the world. The study is also the first global, mixed method poll of financial services professionals. Survation worked with the RSRCHXchange team to incorporate global online polling in addition to telephone polling of respondents in the UK and EU.
Survation also targeted financial services professionals such as portfolio managers and compliance managers, who would be directly affected by the MiFID II changes, thus would be able to give the most detailed input as to how MiFID II would affect their fund’s future strategies and plans.
Only 13% of those polled expected to continue using all 9 of the biggest investment banks in the world, companies such as JPMorgan Chase and Goldman Sachs. Two thirds (67%) of respondents expected these banks to constitute less than 60% of their research costs going forward.
The Markets in Financial Instruments Directive, more commonly known as MiFID, is a set of EU regulations that came into force in 2007. The updated MiFID II, is due to come into effect in January 2018 and will affect how asset managers purchase research for use in decision making within their bank. Our survey shows that 15% of respondents said their companies are already MiFID II compliant with 65% expecting to become compliant before the January 2018 introduction date, a third of respondents (34%) were unsure when their company would become MiFID II compliant. The biggest challenge to becoming MiFID II compliant was the need to regularly set and assess internal research budgets. 37% of our respondents said this was the biggest challenge.
Elsewhere in the poll:
- 86% of US funds anticipate the MiFID II rules on research unbundling to impact them eventually
- 54% of respondents at the biggest funds expected their research budgets to fall
- Written research is by far the most valued and most frequently consumed of all the research services
- 50% of respondents are undecided on how they will pay for research under MIFID II. 38% of those who did express a view on how they will pay for research said they would be paying from their own resources, rather than passing the costs onto clients.
If you are interested in finding out more about the RSRCHXchange findings, you can access them here.
Data tables can be found here.
Survation conduct telephone, online and in-person market research, as well as strategy & advisory research for well-known brands & organisations. Survation are members of the British Polling Council.
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