Frost Consulting launches Mifid II cost platform
With Mifid II rules looming, Frost Consulting has launched FrostRB, a platform that enables managers to establish a monetary value for unpriced research products and construct research budgets that meet the pending regulatory requirements.
Mifid II will require asset managers to tell their clients, the asset owners, much more about expected research budgets, implying budgets must be set transparently at the strategy or fund level rather than at the company level, Frost Consulting said. This also means requirements to provide monetary values for research that is budgeted per asset class.
It estimates that asset managers spend some $20bn annually of commission on external research, but there is precious little information that can specifically tie the cost of this type of research to specific funds; Frost Consulting adds that this raises the risk of cross-subsidies – asset owner’s commission payments buying research that is unrelated to the strategy in which they are invested.
“These unnecessary costs and inefficiencies reduce returns for asset owners,” Frost Consulting stated.
Neil Scarth, principal, Frost Consulting, said: “The institutional investment research market is at the inflection point of the biggest change since the US Securities and Exchange Act of 1934. We are very excited to be launching FrostRB to help asset managers create, and demonstrate, better investment outcomes for asset owners.”