- A recent piece from IR Mag dissects CFA Institute’s position paper entitled The Future of Research in the US After MiFID II. The Institute makes it clear that the European regulation pushed US regulators to a place “they did not want to go,” going as far to say that the European regulation is “…causing tectonic shifts in the competitive balance between asset managers, brokers and research providers.” The paper provides six specific recommendations for asset managers and the SEC, including revising the definition of best execution and improving reporting to asset owners, around a theme of transparency. “Greater transparency around how much investment managers pay brokers and others for research is something asset owners have long wanted, and something CFA Institute has recommended since the release of its original Soft Dollar Standards [in 1998],” according to Jim Allen, head of Americas capital markets policy at CFA Institute. (Tim Carr)
- Changes to corporate access continue, especially the expansion of internal buy-side corporate access teams. We liked this IR Magazine interview with Grant Bartucci, associate director of corporate access and broker relations at Point72 Asset Management, a name that pops up on the shareholder base of numerous issuers. In this article, Bartucci explains his role at Point72, the impact of Mifid II on corporate access and how companies should engage with his firm. ‘We want to develop meaningful relationships with companies so that we can create a consistent and compliant two-way dialogue,’ he says. (Hal Garrity)
-Lots of ways to take this article, “Can AI Help Make Active Strategies More Marketable?” from Bloomberg – the synopsis is that the few quant-managed active ETFs have not outperformed the market and thus aren’t building large asset bases. However, what’s left unsaid here is that Renaissance Tech, AQR, and other quant strategy hedge fund providers have proven very effective in setting up trading models that benefit from AI…but they charge 2 and 20 (or more), don’t have to publish either their portfolios or their returns publicly, and as the article mentions, don’t face distribution requirements that can force liquidity events like standard mutual funds do. Of course, we’ve seen media mentions of non-transparent ETFs that might mitigate one of those differences down the road. But, if there’s an ETF manager that can square that circle, the spoils might be limitless.