Capital markets – research on small and mid-sized companies and fixed income (updated rules in light of the COVID-19 pandemic)

ING Bank is pleased to offer its feedback in response to the Commission’s proposals on changes to the MiFID II rules for research. We have divided our response into two parts, one addressing the aspects of the proposals relating to fixed income research and another part for the aspects relating to equity research.

Dear Sir, Madam, Thank you for giving us the opportunity to comment on the proposal published by the European Commission to review the delegated directive 2017/593 of 7 April 2016 with regard to research funding. We very much welcome this European Commission proposal and would like to share the attached comments to give it its full effect. Sincerely.

Thank you for the opportunity to give feedback on revisions to DELEGATED DIRECTIVE (EU) 2017/59. Citi is committed to supporting economic recovery across the European Union and sound capital markets. Citi Research is an independent department within Citigroup’s Institutional Clients Group, essentially our investment bank. Citi Research covers almost 3,500 companies including 460 within the EU27.

About AMAFI. Association française des marchés financiers (AMAFI) is the trade organisation working at national, European and international levels to represent financial market participants in France. It mainly acts on behalf of credit institutions, investment firms and trading and post-trade infrastructures, regardless of where they operate or where their clients or counterparties are located.

The European Commission’ proposal goes in the right direction but we encourage the Commission to go further and consider other pieces of improvements on topics such as: I.The bundling, especially on: • Bundling threshold • Funding • Methodology of the fixed income bundling II.The issuer-sponsored research III.The free trials I.

FIA EPTA welcomes the opportunity to provide feedback on the proposed MiFID II Quick-fix rules in relation to research on companies seeking alternative financing. Overall, we believe that the unbundling rules laid out in MiFID II removed an important source for conflicts of interest and has reinforced the independence of research.

EBF welcomes the EU Commission proposal to amend MiFID II delegated Directive (EU) 2017/593 aiming at easing the funding of researche unbundling regime for the of execution services and investment research regarding small and midcap issuers and fixed income instruments.

Swift, but… EFAMA appreciates that the European Commission is pursuing an alleviation of certain MiFID II requirements in the interest of promoting a swift recovery from the economic crisis precipitated by the COVID-19 pandemic.

Nasdaq welcomes the Commission’s proposals as a step in the right direction. In the longer term, we hope further steps can be taken. Please find a few comments below. Research coverage of SMEs is sub-optimal. This has been the case since long and although the situation varies across markets, there is significant room for improvement everywhere.

ICMA’s Asset Management and Investors Council welcomes the opportunity to comment on the draft delegated act seeking to review research unbundling rules as part of the Commission's overall coronavirus recovery strategy.

Assogestioni, the Italian investment management association , share the objective of the Commission to contribute to a wider research coverage for SMEs and increase their visibility for investors. The amendment of the current regime for research on small and mid-cap issuers with the introduction of an optional regime and a broader definition of an SME are positive steps forward.

Dear Madam, Sir, Please find attached Invesco’s response to the European Commission consultation on the draft Delegated Directive proposing to amend the MiFID II regime for research on small and mid-cap issuers and fixed-income instruments. Invesco welcomes the opportunity to contribute to the consultation, and thanks the European Commission for its constructive engagement with industry.

HSBC Global Banking & Markets (HSBC GBM) welcome the Commission’s initiative to improve market conditions to allow capital markets to manage the challenges and support the recovery from the COVID-19 pandemic. HSBC GBM welcomes the Commission’s stated goals to increase the availability of information on SME and fixed income instruments to facilitate investment in the real economy and free up resources for both firms…

AFME supports the objectives of the European Commission’s Capital Markets Recovery Package as part of the Commission's overall COVID-19 recovery strategy and welcomes the opportunity to comment on the targeted adjustments to the MiFID II research unbundling regime set out in the draft delegated act. AFME’s response to the consultation can be found attached.

FBF appreciates the opportunity to comment on the Commission’s delegated directive amending the delegated directive (EU) 2017/593 as regards the regime for research on small and mid-cap issuers (“SMEs”) and on fixed-income instruments to help the recovery from the COVID-19 pandemic.

We welcome the European Commission's consultation and strongly support the proposed exemption of research on SMEs with a market capitalization of up to EUR 1 bn. As one of the largest banking groups in CEE, we have been observing a significant drop in the availability of SME research since the application of the current cost unbundling regime.

The European Association of Independent Research Providers Limited (Euro IRP) Response to European Commission Public Consultation on Capital markets – research on companies seeking alternative financing (updated rules in light of COVID-19) The European Association of Independent Research Providers (Euro IRP) is the industry group that represents over 70 independent investment research organisations, from…

OFAF appreciates the fact that the Commission incorporates a revision of MiFID II into the draft delegated acts submitted for consultation. The SCFAF welcomes the proposal to introduce a unbundling threshold to allow a return to a situation prior to the application of MiFID II on 3 January 2018.

Filed in French · English published by the European Commission

The ASF first wishes to thank the European Commission for the opportunity given to comment on the proposed revision of the delegated directive EU 2017/593. The ASF would like to point out once again that its members very early on expressed their concerns about the negative effects of MiFID 2 on financial research, in particular for SMEs.

We share the objective of increasing the production of financial research on SMEs, the level of which is currently not adequate to support their funding needs on the capital market. Still, the solution proposed by the European Commission appears to be an unsuitable remedy to the relevant causes. As correctly perceived by the Commission, unbundling has had a negative impact on SME research.

BVI welcomes the opportunity to respond to the proposal amending delegated directive (EU) 2017/593 as regards the regime for research on small and mid-cap issuers (SME) and on fixed-income instruments to help the recovery from the COVID-19 pandemic.

Deutsche Börse Group (DBG) welcomes the proposed Delegated Act on SME Research. We share the Commission’s view that exempting small and mid-cap enterprises (SMEs) from the unbundling rule will contribute to an increase of research coverage for those. Moreover, we agree with the definition of SMEs (market capitalisation of < EUR 1 bn over 12 months period).

Finance Finland (FFI) represents the majority of banks, insurers, finance houses, securities dealers, fund management companies and financial employers operating in Finland. It has 323 member organisations. Finance Finland is not in favour of the Commission's proposal for amendments to the unbundling rules described in the draft delegated directive. FFI sees that the scope of application is too limited.

We agree with the Commission that the MiFID unbundling rules were just one of the factors that resulted in less research on SMEs. In our view, SME research coverage would probably increase if there were a better likelihood of it being profitable.

The European Leveraged Finance Association (ELFA) is in support of the proposed introduction of an exemption from the research unbundling rules with respect to fixed income instruments. Such measures will contribute towards to improvement of research quality in the fixed income space, provide more fair pricing for those investors who ultimately bear the cost of such research, and alleviate some of the burden that…

The Bundesverband der Wertpapierfirmen e.V.(bwf) is a trade association representing the common professional interests of securities trading firms, market specialists (market makers) at the securities exchanges throughout Germany and other investment firms.

CFA Institute welcomes the opportunity to provide its views on the proposed changes to the investment research rules under the MiFID II regulatory framework. CFA Institute has some reservation about the generalized relaxation approach and, in particular, the proposal of exempting unbundling of investment research for small and medium caps, including fixed-income research.

Finance Denmark acknowledge that it is evident that there has been a decline in research coverage for small and mid-cap companies, but we do not believe that rolling back the unbundling regime is not the right way to solve this chal-lenge. We see issuer sponsored research as a much better tool to solve this chal-lenge.

AlphaValue, an entirely independent equity research provider (purely subscription based, paid by buyside market participants), begs to disagree with targeted amendments to Article 13 of the delegated Directive (EU) 2017/593.

FESE very much welcomes the proposed Delegated Act on SME Research. We share the Commission’s expectation that exempting small and mid-cap companies from the unbundling rule should result in an increase of research coverage for those companies.