MiFID II May Hurt SmallCap Issuers and Burden Investor Relations
Many critics of MiFID II continue to highlight its potentially negative impact on smaller issuers. The big concern is that banks will choose to limit or eliminate coverage of smaller, less followed companies.
A recent Bloomberg article echoed these concerns saying;
“Liquidity may wane among small- and medium-sized companies as banks scale back their research services in response to MiFID II pressure. With fewer analysts, there will be less research, and banks could cut coverage of less-popular companies. This may prove challenging for smaller banks — these companies are also their key corporate clients. Regulators may make some changes to the rule after reviewing its impact on the research coverage of small-and medium-sized companies, scheduled for 1Q19.”
The article also says that MiFID II might miake things more difficult for company IR teams;
“As banks scale back, companies will need to complete for the attention of a smaller analyst pool, liaise with more independents and market direct to investors. They’ll need to make it easier to follow the company. This could involve improving their websites, and presentation material, and facilitating corporate access.”
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