As stated in a recent survey by Greenwich Associates it appears that major Asset Managers will implement MiFID2 even if it is not mandatory in their country. Brokers too have the same approach. This position could be explained by the cost of implementation of various reporting tools in different regions that seems by far to expensive and complicated. Once again it shows that the impacts of MiFID2 are clearly underestimated. MiFID2 will change the landscape and relations between Corporates/Brokers and Asset Managers deeply in the coming months.
What a surprise! It has long been known that few players were compliant with the unbundling of research and corporate access in the UK. But this news is very important. It highlights the determination of FCA to ban investors to use the money of their clients to pay for corporate access. This position confirms the strict understanding of unbundling and it will have impact on the long-awaited position of ESMA on Corporate Access and Research. Can Research and Corporate Access still be combined or not and more importantly on how these services can be paid by investors. Off course at MyDCA with have our understanding. Full unbundling will bring in the mid-term additional efficiency in the market and increased value for money spend by investors. The drama should end shortly now, with the ESMA position that will come soon. Investors and Corporates now only have 296 days left to organized themselves to face this once in a lifetime regulation change. Don’t hesitate to join our plateform www.mydca.eu or request a demo.
Waterloo might be a bit strong!! Corporate access won’t change overnight. But it is more like the Great Retreat of 1812… Historical players will suffer from the new entrant’s competition and a rapid market change after years of uncontested market dominance. Everyone could agree that whatever the final position of the ESMA is, Corporate Access will change dramatically. Increased transparency will be the rule and this implies a detailed view and audit trail for PM to be able to justify their consumption of the service and for Corporates additional costs. It might be a pain on the neck at the beginning but as this article states it well, it will in the coming future leads to better and more cost-effective services delivered to PM and Corporates.
If you still have question on how the research distribution model will evolve, here is a first answer. Macquarie is not one of the largest brokerage house in the world but it is not a tiny one either. And there move to a pay per use model will impact competitors. With Mifid 2 Asset managers will have the opportunity to pay for what they consume. That is major shift in the financial industry and one can bet that old fashioned broker model will be shaken deeper and more rapidly that anyone can at this stage anticipate it.
Paris-Based Corporate Access Platform MyDCA Launches
By Sanford Bragg September 26, 2016
A new French corporate access platform, MyDCA, which we profiled in June, is launching today.
The Paris-based platform is based on a pay-per-use pricing model rather than a subscription fee, or as is the case with most corporate access, being tied to commission volumes or trading relationships. The meeting initiator, whether companies or asset managers (or in theory brokers), will pay the fee. The platform offers packages of credits which can then be used for meetings, not unlike how expert networks often price their services.
The focus of the platform is to facilitate meetings between Continental corporates and interested investors.
Founder Laurent Dubois has previous investor relations experience, having served as Group Deputy CFO for Altran Technologies with responsibilities including IR. He began working on MyDCA in June 2015.
MyDCA joins an increasingly crowded field of corporate access platforms. A new Swiss platform, Interaction Partners launched earlier this month, also seeking to dis-intermediate the dominance of investment banks in arranging corporate access. US-based Meetyl, UK-based ingage, Closir and ELITE Connect also offer direct connections between corporates and investors.
There are additional players in the corporate access space, such as incumbent Dealogic, WeConvene, A2 Access (now part of Dealogic), OpenExchange, CorporateAccessNetwork, CorpAxe and ONEaccess which seek to facilitate the existing corporate access process by working with the investment banks.
The recent consultation paper released by L’Autorité des Marchés Financiers (AMF) does not do any favors for MyDCA or other platforms offering alternatives to the sell side. Based on our analysis, the French regulator proposes a very lenient interpretation of vanilla corporate as a ‘minor non-monetary benefit’ and suggests that corporate access can be bundled with standard analyst coverage.
MyDCA and the other new platforms seeking to dis-intermediate the banks had assumed MiFID II would require greater unbundling of corporate access, but the AMF has not followed the script. UK regulators are likely to be tougher, but that may be cold comfort for MyDCA.