Artemis' Foster: MiFID II research rules will 'disadvantage' European bond managers

Fails to address liquidity problem

The introduction next year of MiFID II rules banning the long-standing practice of managers receiving free research from brokers will penalise European bond fund managers while failing to improve sector transparency, according to James Foster, manager of the £992m Artemis Strategic Bond fund.

Under the Markets in Financial Instruments Directive II (MiFID II), which will be introduced on 3 January 2018, fund managers cannot receive free investment research from a broker unless it falls within narrow exceptions, such as "non-substantive" commentary, as it will be considered an inducement. But according to Foster (pictured), while this approach could work for equity managers, who already pay for most of their research, it will disadvantage European bond managers.  This is because they will have to pay brokers both through the bid/offer spread as well as an extra specific rese...