The shake-up has prompted asset managers to reassess the content they receive, and many are thought to be slashing their research budgets. For small and mid-cap brokers, the overhaul is hurting the profitability of their research departments, while hampering their ability to win equities trading business. It comes at a time when commissions are low and fundraising is fairly subdued
One of the most revered names in City stockbroking, Numis has weathered the turbulence of the feast-or-famine broking industry better than most. In the latest half-year trading update, Numis boasted revenues and profits “significantly ahead” of the same period the previous year. The broker highlighted “higher average deal fees” as it lured bigger clients, and a “strong near-term pipeline” of fundraising opportunities. Nevertheless, MiFID II appears to have reared its ugly head: Numis’s performance slowed when compared with the previous half, it said.
Cenkos has performed quite the turnround. The broker, which recently ushered in former Bank of England economist Anthony Hotson as chief executive, rebounded from a sluggish 2016 to post near triple-digit profit growth last year.But last year’s bumper deals aside, the company said uncertainty around MiFID II had knocked revenues from research by more than a third to £2.9m, as it cautioned on an uncertain outlook. Its share price fell more than 6 per cent on that results announcement last month.
One of the minnows of the broking world, WH Ireland has had a tough time. To offset the MiFID pain, WH Ireland is revamping its pay structure, and will continue to diversify beyond stockbroking into wealth management — although these efforts were held up last year because of “major issues” around technology updates.
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