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The effect of Mifid II that everyone has misjudged

Why equity research on smaller companies is not going to disappear any time soon

Monday, 15 January 2018 at 05:01

Research on smaller companies is not going to disappear any time soon
Research on smaller companies is not going to disappear any time soon Photo: PW Illustration / Ikon Images / Getty Images

It is way too soon to be sure about the longer-term impact of Mifid II. But pretty much everyone seems confident about one effect of the new regulatory regime introduced on January 3: a slump in the amount of equity research on smaller companies.

The quantity of analysis brokers publish on small and medium-sized companies has been declining for years. Now many observers are forecasting another further sharp contractions because the Mifid II changes will see most asset managers paying for research out of their own pockets for the first time.