The European Commission has issued FAQs in order to clarify how EU investment firms should interact when they seek out brokerage and research services from broker-dealers in non-EU countries.

The FAQs set out answers to the following questions:

  • May a MiFID II portfolio manager or its third country sub-advisor combine: (i) a payment for research; and (ii) a payment for execution services into a single commission to a third country broker-dealer?
  • Are third country broker-dealers required to identify a separate charge for research in cases where a MiFID II portfolio manager or its third country sub-advisor pays for these services out of: (i) a research payment account; or (ii) directly out of its own resources.

Valdis Dombrovskis, Vice-President in charge of Financial Stability, Financial Services and Capital Markets Union, said “With the issued guidance EU firms will have greater clarity on how to deal with non-EU brokers that provide research. In this context, we welcome the decision of the staff of the U.S. Securities and Exchange Commission to simultaneously agree to relief for US brokers supplying research to EU firms. Our coordinated action again shows the excellent EU-US cooperation in international financial regulatory matters.”


The FAQs do not purport to represent an authoritative interpretation of the law and are without prejudice to the view that the Commission may take on the matter in legal proceedings before the European Court of Justice.

The FCA has also issued a statement regarding the announcements made by the Commission and the US Securities and Exchange Commission in relation to the MiFID II inducements and research reforms and their interaction with US regulation.

The FCA statement:

The clarifications provided by both the Commission and SEC staff will address key concerns raised with the FCA by UK market participants. They ensure that firms can continue to access US research from 3 January 2018, while also maintaining the investor protection safeguards of the MiFID II regime.

In supervising the MiFID II inducements and research provisions, and cross-border practices by firms in this area, the FCA will focus on ensuring investors’ interests are advanced. Arrangements which comply with MiFID II and other jurisdictions’ rules, while enabling EU firms’ continued access to research produced by US and other non-EU jurisdictions are likely to be the best way of serving investors.

The Commission and US SEC staff statements enable this. Arrangements in which a UK asset manager pays the EU entity of a broker for global research content, or research is circulated within a buy-side group, can also be an acceptable way of achieving this, provided that they do not influence the firm’s order routing decisions, execution costs and ability to act in its clients’ best interests.

We will continue to engage with firms on their implementation of MiFID II ahead of the 3 January 2018, and will monitor evolving market practices once the new rules are in effect to ensure compliance and evaluate the impact of the changes.

Andrew Bailey, Chief Executive Officer at the FCA, said:

“I am grateful for the constructive conversations with the Commission and SEC over recent months, culminating in today’s announcements. The outcome represents a flexible solution that respects the integrity of both regulatory regimes.”

View MiFID II: EU issues guidance on obtaining brokerage and research services from non-EU brokers, 26 October 2017

View MiFID II: FAQs on obtaining brokerage and research services from non-EU brokers, 26 October 2017

View SEC announces measures to facilitate cross-border implementation of the EU’s MiFID II research provisions, 26 October 2017

View FCA statement on MiFID II inducements and research, 26 October 2017