The great rebundling
The UK has signalled further divergence from the EU and its MiFID II legislative framework in the proposal to allow fund managers to rebundle payments to US broker-dealers for execution and research rules.
Under MiFID II, GPs are required to pay for investment research separately to provide greater transparency to LPs and prevent conflicts of interest. As such, GPs must pay for investment research out of their own resources or through a “research payment account”.
However, this stringent requirement resulted in a misalignment with US legislation whereby accepting a separate payment for research would qualify broker-dealers as investment advisers under the 1940 Investments Advisers Act.