La Financière de l’Echiquier plans to absorb all investment research costs for clients, the firm’s CIO, Olivier de Berranger, told Citywire Selector.
In preparation for MiFID II, which comes into effect next month and affects all asset managers operating in the European Union, the French firm will take on all costs for everything falling under the MiFID II parameters, absorbed to the company’s profits and losses.
‘It's a good idea to say you want the price of research but at the end of the game you will finish by diminishing the global capacity of research, especially for small and mid-cap companies,’ de Berranger (pictured) said.
De Berranger said independent research companies stand to suffer under the new directive as the price of research is being pushed lower.
‘If we want research we have to go to the large companies like JP Morgan, Morgan Stanley and Goldman Sachs. It was not the purpose of the regulation and it is a danger but the regulator is aware of that unintended consequence.
‘For a market to function, you have to have a lot of different players, have stock pickers that are more fundamental, you have to have market makers so that at any point of time, you have a lot of different opinions.’
The announcement of LDFE’s decision comes hot-on-the-heels of Amundi reversing its decision on research costs. The company had originally said it would charge clients and has since said it would absorb the costs.