What is changing

MiFIDII revisits the concept of inducements and states that any investment firm providing or being provided with a non-monetary benefit, needs to demonstrate clearly that it is designed to enhance the quality of service to clients, and the value or fees associated with any such benefit need to be disclosed to end clients. Research material is one of the main items considered to be a non-monetary benefit to clients, meaning the entire research market needs to reconsider how it is produced, distributed, received, evaluated and priced.

There is ongoing debate as to what types of research material are considered a non-monetary benefit, the extra-territoriality of the rules, and the potential for corporate clients paying for research instead of the end investment firm. As a result, the market is starting to see a range of different operational models around research.

Peel Hunt Approach

At Peel Hunt, our policy is that:

• Our equity research is a material non-monetary benefit - access to this will be a chargeable service to those investment firms within the scope of MiFIDII
• Our investment trust research is a material non-monetary benefit - access to this will be a chargeable service to those investment firms within the scope of MiFIDII
• Our macro-economic research is a material non-monetary benefit – access to this will be a chargeable service to those investment firms within the scope of MiFIDII

The commercials around research access will vary across clients and Peel is actively engaged with clients on this front.

If you wish to discuss or enquire about access to Peel Hunt research please contact rsa@peelhunt.com

Operationally, we will support clients who wish to pay for research out of their own funds or via a Research Payment Account (RPA), using the ‘transactional’ or ‘accounting’ methods. Peel Hunt does not plan to act as an RPA administrator.

What does this mean for me?

Peel Hunt research was rated #1 in the 2018 Extel Survey. Our clients value it highly, as do we, and we believe we are very well positioned to continue with extensive distribution of our research in the new environment. While some of our competitors will consider corporate sponsored research to ensure broad distribution, we do not wish to risk compromising the integrity of our equity research in such a model, and believe the quality of our research speaks for itself.