Barings to Absorb External Research Cost Resulting from MiFID II Regulations

Firms are assessing the impact of rising costs resulting from the implementation of MiFID II.

Barings, a leading asset management firm managing global assets worth $288 billion, has announced that it will absorb all of the external investment research costs of following the implementation of the new, stricter MiFID II regulations on the 3rd of January 2018.

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The new legislation states that global asset management firms that operate in the European Union have to unbundle external research costs from trading execution costs, which has been the industry standard until now. After the new regulation kicks in, firms are required to either absorb the research costs or pass them on to clients.

Ghadir Abu Leil-Cooper, Global Head of Equities, said: “Fundamental research is the foundation of successful active management, and over the past several years Barings has made significant investments in expanding its own comprehensive in-house research capabilities, thereby reducing our third-party research costs,” he added: “While we will continue to utilize select external research where it benefits our clients, the decision to absorb those costs is a logical step in strengthening our partnerships with our clients.”

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Tom Finke, Chairman and CEO, said: “Barings possesses exceptional breadth and depth of investment research talent, which serves as the underpinning of a robust global investment platform designed to serve our clients’ needs. Our decision to absorb the costs for third-party research reflects our overarching goal of advancing partnership and putting our clients’ interests first.”

MiFID II, the extension of MiFID, has been the most widely discussed regulation topic around the financial industry due to its imposing regulations upon European asset management firms.

The regulations also directly affect non-EU firms, as every aspect of the investment workflow of European customers will be changed. Non-EU firms dealing with the EU market and EU customers will have to comply with the new regulations.

 

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