Council of Institutional Investors

CII Collaborates to Ask SEC for Improved Disclosure of Research Costs
Tuesday, July 2, 2019
by: CII Staff

Section: MiFID II




In a June 26 joint letter, CII, Healthy Markets and CFA Institute asked the SEC for better disclosure of research costs to asset owners. The letter was in response to MiFID II, year-old European rules that prohibit fund managers from paying for stock research with trading commissions. Since MiFID II went into effect, European fund managers have mostly absorbed the cost of research but U.S. managers continue to use bundled commissions. Many institutional investors are concerned that they are unknowingly subsidizing research in Europe. In the letter, CII, Healthy Markets and CFA Institute urged the SEC to protect asset owners by revising its guidance Section 28E of the Securities Exchange Act of 1934 to require fund managers to disclose amounts paid for research from client accounts.

CII has long supported transparency of research costs and will continue to encourage the SEC to work toward full unbundling of pricing of U.S. brokerage and research services.