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Regulation – MiFID threatens daily morning notes of banks and brokers News

Sunday, August 20th, 2017 | Economy

Similar concepts also use Bill Blain of Mint Partners, who opens his "Blain's Morning Porridge" with a lyrics or a quote, and Jim Reid from Deutsche Bank AG, whose "Early Morning Reid" Economy, interest rates, bonds and currencies.
These are some examples of morning notes that are one of the opportunities for investment banks and brokers to market their services to potential customers.
The problem is that because of the new MiFID-II rules, the companies will soon not be able to distribute analyzes for free – and this could include the morning thoughts of analysts and strategists. The authors may have to charge for their notes, restrict the distribution of emails, or dilute the content.
There's no more free
"MiFID II allows something that is called minor, non-monetary benefits, but that only includes some very basic types of informational analysis," says Hannah Meakin, a partner at Norton Rose Fulbright in London. "In my opinion one would start from the cateogory investment analysis in everything that can be described as a recommendation of an investment strategy or a sound opinion or an essential analysis."
When the revised Markets in Financial Instruments Directive (MiFID II) enters into force in January, it will affect the trading of equities and bonds through derivatives and commodities. The aim is to increase investor protection and transparency.
A question of price
"Invoicing because of MiFID is a real, real problem," says Peters. "Is it not the purpose of reading analyzes to gather the most diverse views on a selected topic and, hopefully, to get a few views on some non-selected topics?"
In terms of how much money banks can demand, a two-tier pricing model is established, says Neil Shah of Edison Investment Research. On the one hand, this could include all the analysis services of a large bank – including meetings with analysts and conference invitations – for a high cash amount, but on the other hand, exclusive access to the analysis portal for only 10,000 dollars to 20,000 dollars per year Shah says.
Will non-subscribers get the morning notes for free? "Not if it's a note with something worth saying," Shah says. "For everything with substance you have to pay. In substance, everything is an indication of an investment strategy."
Definitions are spongy
The question of whether the companies will have to issue invoices in the future is due to the blurred border between marketing and analysis. In a list of questions and answers published by the European Securities and Markets Authority (ESMA), it is stated that "short market updates with limited comment or opinion are capable of being viewed as information that has a small, -monetary benefits. "
Reid of the Deutsche Bank insists that he remains optimistic. "I would argue that this makes the best morning notes more valuable," he says. "I do not feel threatened." A spokeswoman for the Frankfurt financial group did not want to provide any further plans for her house at Bloomberg's request.


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