MiFID II Research Unbundling: Separating Research from Execution Costs

Research unbundling under MiFID II means that investment firms must separately disclose and pay for financial research apart from trade execution costs. Since January 2018, research services may no longer be billed as part of bundled commissions. Instead, firms must either pay from their own resources or set up a Research Payment Account (RPA) through which costs are transparently passed on to clients. The goal is to avoid conflicts of interest and strengthen cost transparency for investors.

A Research Payment Account is a separate account through which investment firms handle payments for financial research. The RPA is funded from client funds, with the research budget set in advance and disclosed to clients. The firm must regularly assess whether the research paid for provides adequate value and transparently document the costs to clients. The RPA model ensures that research costs are no longer hidden within trading commissions.

MiFID II unbundling obligations apply to all investment firms providing portfolio management or other investment and ancillary services. This includes asset managers, portfolio managers, and certain pension fund managers based in the EU or EEA. Third-country firms serving clients in the EU must also observe the regulations when working with EU-regulated counterparties.

The most common challenges include: correctly valuing and pricing research services, establishing functional procurement governance processes, handling unsolicited research, and maintaining ongoing documentation of research usage. Many institutions also struggle with distinguishing between reimbursable research and general market information, as well as integrating unbundling processes into existing IT systems.

ADVISORI guides institutions from the initial gap analysis through the design of compliant structures to operational implementation. This includes setting up a Research Payment Account, building procurement governance processes, implementing tracking systems for research usage, and training involved departments. Our consulting approach is practice-oriented and considers the individual processes and systems of each institution.

Violations of MiFID II unbundling obligations can result in supervisory measures including warnings, fines, and in severe cases, revocation of authorisation. BaFin and other national supervisory authorities monitor compliance as part of regular examinations. The FCA in the UK found that unbundling rules save investors an estimated 180 million pounds per year in costs — a sign of the practical relevance of these regulations.

Research unbundling refers to the obligation to separate research costs from trading commissions. Research re-bundling describes the recent regulatory development where supervisory authorities allow bundled payments again under certain conditions. The EU Listing Act (Directive 2024/2811), which must be transposed into national law by June 2026, removes the market capitalisation threshold and generally allows bundled payments again — subject to transparency and quality requirements. In the UK, the FCA is also reviewing a relaxation of unbundling rules.

The EU Listing Act (Directive 2024/2811) allows bundled payments for research and execution services again from June 2026 — regardless of the issuer's market capitalisation. Firms must inform clients about the payment method, establish a research payment policy, enter remuneration agreements with providers, annually assess quality, and document total costs. The aim is to correct the negative impacts of strict unbundling on analyst coverage — particularly for smaller issuers.