MiFID II/MIFIR Consultation Paper – dealing commission payments for investment research – an NAPF response
As significant equity investors, the effective use of good quality research is clearly of benefit to pension funds – the clients of investment managers – as they should benefit from improved performance. However, we are increasingly of the view that the current model for purchasing research creates an inherent conflict of interest for investment managers which increased transparency alone would not resolve.
The use of client money to purchase research displaces what would otherwise be a cost of business for the fund management firm and results in an over-use of and over-supply of external research which is purchased without the level of rigorous due diligence and oversight that a firm would apply to spending its own money.
Our members are supportive of the intention to reform this market and to bring much greater transparency to clients for the use of their money.