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Hedge Funds

AIMA: One-third of hedge fund managers still sorting out how to pay for research ahead of MiFID II

About one-third of fund managers surveyed by the Alternative Investment Management Association have not decided how to pay for research with six months to go before European rules are put in place to that will require transparency in research costs.

Among the two-thirds of managers that have determined how to pay for research under requirements of Markets in Financial Instruments Directive II, 80% will pass on the cost to end clients, while the remainder will pay for the research themselves, according to a summary of the survey released Wednesday by AIMA.

To meet MiFID II requirements for best execution, 50% will review their execution policies but don't expect to make any changes to meet the new rules, while 25% of respondents are conducting an extensive review and 20% said their current execution policies are sufficient.

Regarding algorithmic trading, 40% of respondents said they use algorithms and of those, 50% expect to change their trading systems to comply with MiFID II.

The organization representing hedge fund and private debt managers worldwide surveyed 52 member firms in April.

MiFID II rules go into effect on Jan. 3, 2018.