European bond investors are stuck in a quandary: how much should they pay banks for credit research after insisting for years that it has no price? With less than six months left before the start date of the European Union’s new MiFID II rules that require banks to separate charges for trades and research, answers are starting to emerge. Proposals include 120,000 euros ($138,000) a year for premium packages from Credit Agricole and Nomura Holdings covering a range of research.
Regulators insist that the cost of credit research is built into the bid-offer spread — the difference in price at which a broker is willing to buy or sell — so spreads will narrow when this charge is stripped out. The industry dismisses the claim, and some asset managers argue that charging cash will mean less research and higher costs for investors.