Barings to Absorb External Research Cost Resulting from MiFID II Regulations

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 Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term costs, which has been the industry standard until now. After the new Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term 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.”

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.