In 2018, the EU introduced the MiFID II rules, part of which required the unbundling of research revenues from trading revenues, so research analysts wouldn‘t make recommendations just to increase trading volume for their employer.
At what point will regulators appreciate that the law of diminishing returns has set in with regulation. Whilst the intentions might be admirable I would question as to whether the majority of investors (certainly the clients of the large institutions) are getting a better deal than before. In the meantime other actors in the market (speaking as a certified fiduciary adviser) are being drowned by petty regulations that make no difference to the end investor.
As someone who focuses very much on small and mid caps I can tell you that research coverage of these stocks has dried up a lot simply because it is no longer commercial. Every regulation has unintended consequences but regulators seem to think that the response to these unintended consequences is more regulation. It is very frustrating…
It's a case of " to the hammer every problem looks like a nail". Regulators gonna regulate. And politically it's far harder to undo regulation than to simply create new ones. (Why that is I can only guess).
At what point will regulators appreciate that the law of diminishing returns has set in with regulation. Whilst the intentions might be admirable I would question as to whether the majority of investors (certainly the clients of the large institutions) are getting a better deal than before. In the meantime other actors in the market (speaking as a certified fiduciary adviser) are being drowned by petty regulations that make no difference to the end investor.
As someone who focuses very much on small and mid caps I can tell you that research coverage of these stocks has dried up a lot simply because it is no longer commercial. Every regulation has unintended consequences but regulators seem to think that the response to these unintended consequences is more regulation. It is very frustrating…
It's a case of " to the hammer every problem looks like a nail". Regulators gonna regulate. And politically it's far harder to undo regulation than to simply create new ones. (Why that is I can only guess).