Regulation 

Kempen to cover research costs from 2018

Kempen to cover research costs from 2018

Kempen Capital Management has announced it will comply with Mifid II regulation requirements from next year.

Mifid II requires asset management companies to either pass on the cost of external investment research to clients or to absorb the costs internally.

empen has chosen to cover these costs itself.

The regulation denotes specific costs incurred for external investment research must be transparent, rather than the current situation, where trading and research costs are fused together and presented to the client in a single fee.

Mifod’s intention is to provide separate pricing for external investment research, or ‘unbundling’, so clients are reassured of the pricing structure they face.

Lars Dijkstra, chief investment officer at Kempen, said: "We welcome any change to increase transparency and efficiency in the financial sector. Kempen has always invested heavily in both the quality and quantity of our internal research system.

"This makes us less dependent on external research service providers. Obviously, we will continue to work together in future with a group of selected, high-quality suppliers of investment research services.”

Julie Patterson, head of regulatory change in asset management at KPMG, said: “Transparency runs right through the Mifid II plant, and there is evidence already that asset managers are considering absorbing the costs internally and using external sources to unbundle.

"Right now I would say it is a 50-50 split, both approaches have their benefits and I think it’s just down to the make-up of distinct companies. At the end of the day, transparency and client confidence is key, which is beneficial to us all."

Back in March, sister newspaper Investment Adviser reported the likes of First State, M&G and Jupiter have said they will account for the charges on their own balance sheet, while Henderson, Man Group and Amundi are among those to have plumped for the second option.

But specialists suggested many firms have left it too late to have effective practices in place by 1 January 2018. 

“The panic will start in about August or September. It won’t be holistically sorted for the start and we will have a soft start,” said Jake Green, partner at law firm Ashurst.

dan.moore@ft.com

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