The New MiFID II Research Payment Framework

Introduction

The Listing Act Directive¹ reforms introduce a significant change to the MiFID II research regime by allowing investment firms sgreater flexibility yin how they pay for research and execution services. In particular, firms may now choose to pay jointly or separately for those services regardless of the market capitalisation of the issuer concerned. This Briefing Paper outlines the key changes introduced by the Listing Act Directive.

Background

One of the more controversial features of MiFID II was the introduction of the so-called “unbundling” regime, which became applicable from January 2018. Under those rules, the traditional practice of investment firms spaying for investment research through bundled brokerage commissions was largely prohibited. Instead, investment firms were generally required to separate payments for investment research from payments for execution services and either: (i) pay for investment research from their own resources; or (ii) establish a