ESMA publishes SMSG advice on MiFID investment research changes under the EU Listing Act

The European Securities and Markets Authority (ESMA) published advice from the Securities and Markets Stakeholder Group (SMSG) on the ESMA consultation paper on draft technical advice on investment research. The technical advice relates to changes to the Markets in Financial Instruments Directive (MiFID) regime for investment research in the context of the EU Listing Act legislative package. These changes allow for joint payments to be made for execution services and research, subject to certain conditions. The ESMA consultation paper proposed amendments to article 13 of Directive (EU) 2017/593 (referred to as the MiFID Delegated Directive).

The SMSG advice includes a summary of findings from academic studies on MiFID research provisions, and notes that there has been an improvement in research quality and mitigation of conflicts of interest, but a reduction in the overall quantity of research. The SMSG advice also notes that there has been a shift from traditional sell-side research to sponsored research for SMEs, and that there is a trend among asset managers to continue to pay for research separately (even in circumstances where they would be able to pay for it jointly with other services) due to the operational complexity of running two separate invoicing systems. The deadline for ESMA to deliver its technical advice to the European Commission is 30 April 2025.

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