Our thinking

MiFID II at a Glance

What it is, and how it will affect companies.

  • MiFID II comes into effect on 3rd January 2018. For corporates, this will have important implications for which they need to start planning now.

  • MiFID II is designed to offer greater protection for investors and inject more transparency into investment managers’ relationship with brokers.

  • A key impact is the requirement for banks to unbundle the cost of research. This will likely have an impact on how much research is produced, and which companies are covered.

  • The number of analysts covering companies will likely decline. As a result, some smaller companies, and those in out-of-favour sectors, might find themselves dropped from analyst coverage, or covered only sporadically.

  • There could be unintended consequences. If fewer analysts cover a stock, how will the market reach consensus earnings? How will investors research companies that are not covered? Will other forms of research, either written or technology-driven, come to the fore? How will journalists and other market observers access research?

  • Companies should be prepared for more direct engagement with investors as fund managers build up their own research teams and decrease reliance on sell-side analysts.

  • Companies will need to ensure they have a clear story and that it reaches the right audiences. 

  • MiFID II does not affect the communication of research between companies and journalists, although later iterations of the directive could contain language to address this subject.

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