Is it good or bad when corporations pay analysts to present evaluations of their own shares? Mostly bad because it is partial, thinks the European Union, which has largely banned the practice under MiFID II, the latest generation of the Markets in Financial Instruments Directive.
Yet the United States Securities and Exchange Commission (SEC) seems to stay on the opposite foot, viewing broad access to paid research, too, as good.
“Flexibility and choice”
“The impacts of MiFID II are evolving, as EU authorities and regulators in individual EU member states evaluate its effects and consider whether to modify their rules. Today’s extension will allow our staff to continue to monitor the evolving impact of MiFID II and evaluate whether any additional guidance or Commission action is appropriate. In this regard, our staff is focused on ensuring that market participants have flexibility and choice in how they pay for research,” says SEC chairman Jay Clayton, according to a press release published Monday.
“Today’s extension of the staff’s no-action letter is an important step in our continued efforts to address changes in the market for research payments driven by MiFID II with an eye toward preserving investor access to research to the maximum extent possible.”
The new SEC staff letter extends the no-action policy, which was set to expire 3 July 2020, to 3 July 2023.