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European Commission concerned by banks' research pricing

The European Commission's financial stability team Fisma has contacted some European banks over the price they charge asset managers for research, Financial News has reported.02 Aug 2017

Fisma is concerned that banks are cutting prices to win contracts, potentially undermining efforts to remove inducements from the sale of research, Financial News said.

Under the new Markets in Financial Instruments Directive (MiFID II) that will come into force in January 2018, asset managers will have to split the costs of research and trading instead of charging ‘bundled’ rates for services.

MiFID II will revise and update the existing MiFID rules applicable to investment services across the European Economic Area (EEA). The revised regime is designed to take into account developments in the trading environment since the original directive came into force, and also aims to strengthen investor protection and increase market resilience.

The revised rules will also apply to a broader range of financial instruments, trading venues and techniques, notably the use of algorithmic high-frequency trading. These range from global investment banks trading complex securities to fund managers, stockbrokers and independent high street financial advisers providing advice to the general public.

A European Commission official said that Fisma is "in regular contact with banks all over Europe to assess their progress toward autonomous pricing of investment research".