Tracking liquidity & broker research impact of regulatory change
Hardman & Co, the UK’s longest-established commissioned research provider, has today launched its MiFID II Monitor, designed to track the impact on trading liquidity and broker research arising from the Markets in Financial Instruments Directive II (“MiFID II”).
Hardman & Co’s MiFID II Monitor suggests that the first six months since MiFID II implementation on 3 January 2018 has seen a steepening reduction in trading liquidity and broker research coverage across most areas of the stock market. These two metrics underpin transparency, price discovery and investor confidence, all key parameters for a healthy stock market.
The notable impact has been among mid-cap companies listed on the London Stock Exchange’s Main Market, with liquidity falling by 9.8% on a rolling 12-month basis.
The new MiFID II rules prohibit institutional investors from freely receiving broker equity research unless it is paid for by a listed company from a commissioned research provider or their corporate broker.