The firewall that Wall Street hoped would protect its U.S. stock and bond analysts from tough European rules is starting to crack.
At issue are European Union regulations that took effect last year that forced banks to start charging clients separately for trading and research, rather than bundling the services into one bill. In October 2017, U.S. brokers scored a major win when the Securities and Exchange Commission issued a legal reprieve that at least temporarily kept the rules from spreading to America.
But in the ensuing months, some of the brokers' most important customers — big fund managers — have grown frustrated with having to pay a single tab for everything in the U.S. and then write multiple checks in Europe.
At the same time, money managers are facing pressure from their own clients, who ultimately pay the fees that brokers charge mutual funds.