It has been a year since MiFID II came into force bringing with it stringent conditions to ensure transparency and investor protection in the market. In this article, however, Sheen highlights that there are ‘still obstacles to overcome’.
Mike Sheen explains ‘The requirement to ‘unbundle’ research costs from the rest of sell-side services is thought to have taken a toll on research coverage and therefore liquidity as a result of reduced trading volumes.’ Asset Mangers have turned to cutting the number of brokers in order to reduce cost and this has led to a reduction in stock liquidity.
The article references the MiFID II Monitor published late last year ‘Analysis from research provider Hardman & Co in December revealed that since the introduction of MIFID II liquidity levels across the market have declined, with London Stock Exchange main market liquidity falling by an average of 15.5% per stock in 2018.’
The MiFID II Monitor is designed to track the impact on trading liquidity and broker research arising from the Markets in Financial Instruments Directive II.