Research Unbundling and Market Liquidity: Evidence from MiFID II

Anqi Fu, Tim Jenkinson, David Newton, Ru Xie

Research output: Contribution to journalArticlepeer-review

2 Citations (SciVal)

Abstract

The second Markets in Financial Instruments Directive (MiFID II) mandated the unbundling of payments for research and trading. This research explores whether the impact of MiFID II differs between large and small firms in terms of analyst coverage and stock liquidity. Focusing on the UK stock markets we find a significant drop in analyst coverage on the Main Market, which leads to a deterioration in market liquidity. In contrast, the requirement of AIM firms to retain a Nominated Adviser, who often provides research coverage, has mitigated the impact of MiFID II.
Original languageEnglish
Pages (from-to)1759-1786
JournalEuropean Financial Management
Volume30
Issue number4
Early online date9 Oct 2023
DOIs
Publication statusPublished - 30 Sept 2024

Data Availability Statement

The data that support the findings will be available in Refinitiv Database following an embargo from the date of publication to allow for commercialization of research findings. Data subject to third‐party restrictions. The data that support the findings of this study are available fromRefinitiv.com. Restrictions apply to the availability of these data, which were used under license for this study. Data are available at www.refinitiv.com with the permission of Refinitiv

Keywords

  • MiFID II
  • analyst coverage
  • stock liquidity
  • unbundling

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)
  • Accounting

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