The implementation of the second Market in Financial in Instruments Directive (MiFID II) has altered the market economy of research and brings the issue of small caps and mid caps coverage into focus, according to the French regulator, Autorité des Marchés Financiers (AMF).
The AMF board has appointed Jacqueline Eli-Namer, an AMF Board member, and Thierry Giami, president of the French Society of Financial Analysts (SFAF) to work with financial market stakeholders to explore concrete ways of improving the situation.
According to AMF, while the large listed companies are widely covered, small caps are traditionally less followed by analysts.
Eli-Namer and Giami aim to fine-tune the assessment of the direction in which research is headed and to explore ways of mobilising the marketplace and improving the situation.
The results of the study should be available by the end of the year.
AMF said: “The fall in prices of invoiced research, coupled with the streamlining of investors’ budgets, has had an impact on the number of analysts and the coverage of firms.”
“At the same time, research sponsored by issuers is on the rise. Although this has curbed the erosion of the analysis produced, it raises specific issues, particularly in terms of managing conflicts of interest.”
It added: “The French stock market’s objective is to promote the listing of small and mid caps, and while France has a broad base of financial analysts, it is desirable to explore initiatives that could be taken to ensure that small and mid cap companies are covered by high-quality research.”
