Zeus Capital will not charge fund managers for its research after MiFID II, becoming the first small-cap broker to reveal plans for the shake-up.
Some fund and asset managers have revealed their plans for MiFID II (the second incarnation of the Markets in Financial Instruments Directive), which comes into effect in January.
But small and mid-cap brokers are still working out how they will deal with the regulations, which will force them to break out the costs of research and trading commissions, stoking fears that the so-called buy-side — fund managers and asset managers — will stop spending money on research.
Larger investment banks such as ING are planning to give some of their research away for free.
Sources said that instead of charging investors for research, Zeus’s corporate clients, which include Purplebricks Plc (LON:PURP) and Boohoo.com (LON:BOO), will cover the costs as part of its retainer, meaning it is exempt from being an inducement to trade.
Zeus Capital chief operating officer Darren Ellis confirmed the plans and said: “We know that small and mid-cap ideas have to be ‘broked’ and research is a key part of this. We therefore will not and cannot accept any payment from the buy-side for our research.”
Zeus also helps float and raise money for firms and is less dependent on research than other, smaller brokers.