The SEC Should Let Broker-Dealers Unbundle Research Costs

Law360 (June 11, 2019, 2:45 PM EDT) -- The U.S. Securities and Exchange Commission is considering important questions concerning the regulation of research services provided by U.S. broker-dealers. Paradoxically, the issues arise because of a directive from the European Parliament commonly known as MiFID II.[1] MiFID II requires European Union investment managers to unbundle research and execution costs, and will continue to impose this requirement for the foreseeable future.

Traditionally, U.S. money managers have received research as part of their commission arrangements with broker-dealers. Managers may pay in excess of the lowest possible commission for execution if they get fair value for brokerage and/or research under Section 28(e) of the...

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