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How fund groups could comply with Mifid II research payment rules

Proposed code of conduct will cover the different approaches asset managers can use to charge investors for their use of external research

Money-Cash-Coins-GBP-Pounds-UK-700x450.jpgA number of research service providers have drafted a code of conduct that aims to help asset managers observe best practice following the introduction of Mifid II research unbundling rules.

According to Mifid II, which is set to be implemented in January 2018, fund managers must decide whether to pay for research themselves, through their own balance sheet, or charging investors through a research payment account.

The proposed research payment account code, published by investment research firm Substantive Research Partners and set to be launched at the end of the year, will cover the different approaches asset managers can use to charge investors for their use of external research.

The code will focus on three key principles of transparency, governance and the alignment of interests with clients.

The project also follows the FCA’s Mifid II consultation paper in September which proposed to ban independent advisers and portfolio managers from accepting payments from third party firms on investment research.

The FCA said only certain research products such as commentary on market movements or company results may be exempt as “minor” and “non-monetary.”

The five research firms that have worked at the code – Substantive Research Partners, ANALEC, IHS Markit, Instinet and WeConvene, consulted with around 50 asset management firms between June 2015 and October 2016.

Fund managers are encouraged to provide feedback on the code before launch.



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