MiFID II Quick Fix – for real?
The European institutions (Commission, Council, and Parliament) recently reached political agreement to adjust some controversial MiFID II rules. Recall that one aspect of MiFID II was to provide better cost transparency between brokers (sell-side) and investors, therefore requiring investors to pay separately for trading execution and access to research.
Under the amended regulation known as MiFID II “Quick fix”, companies with a market capitalization of less than €1bn will no longer be subject to the so-called “unbundling”. It is expected that the change will encourage:
- greater analyst coverage of smaller issuers, and thus
- increased trading in the stock
The change requires formal EU approval¹ and then transposition in each member states legal framework, suggesting nothing can change before end 2021 or early 2022.
While likely good news for Biotech’s, it remains to be seen if this will improve:
- research coverage
- corporate access / roadshow
given that, fundamentally, trading volume for smaller firms is too small to pay for the service.
Future will tell, meanwhile let’s prepare for it. Get in touch to discuss the opportunity.
(first published on LinkedIn on Jan. 4, 2021)
1: the selective re-bundeling (execution – research) has been published end February 2021 in the “Official Journal of the European Union” as Directive (EU) 2021/338.
MiFID II Quick Fix – for real?
The European institutions (Commission, Council, and Parliament) recently reached political agreement to adjust some controversial MiFID II rules. Recall that one aspect of MiFID II was to provide better cost transparency between brokers (sell-side) and investors, therefore requiring investors to pay separately for trading execution and access to research.
Under the amended regulation known as MiFID II “Quick fix”, companies with a market capitalization of less than €1bn will no longer be subject to the so-called “unbundling”. It is expected that the change will encourage:
- greater analyst coverage of smaller issuers, and thus
- increased trading in the stock
The change requires formal EU approval¹ and then transposition in each member states legal framework, suggesting nothing can change before end 2021 or early 2022.
While likely good news for Biotech’s, it remains to be seen if this will improve:
- research coverage
- corporate access / roadshow
given that, fundamentally, trading volume for smaller firms is too small to pay for the service.
Future will tell, meanwhile let’s prepare for it. Get in touch to discuss the opportunity.
(first published on LinkedIn on Jan. 4, 2021)
1: the selective re-bundeling (execution – research) has been published end February 2021 in the “Official Journal of the European Union” as Directive (EU) 2021/338.