(TradersMagazine) A new report from Greenwich Associates, European Equity Trading and the Consequences of Regulation reveals that European buyside traders and portfolio managers believe MiFID II provisions could increase trade execution costs and reduce market liquidity—particularly in small cap stocks.
More than 3.4 billion Euro in commission payments earned by brokerage firms on institutional trades of European equities in the year ending Q2 2015 was about evenly divided. An estimated 53 percent pay for research and advisory services and 47 percent take the form of payments for trade execution services, according to Greenwich Associates.
“The debate over MiFID II has sparked intense speculation about the future of the European equity research business. Much less attention has been paid to the potentially profound impacts of the regulatory proposals on the European cash equity trading business,” according to a press statement.
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