The AFG is responding to an ESMA consultation on the impact of the listing act on the possible link between research costs and execution fees. The listing act removes the condition that allowed bundling only for issuers with a market capitalisation of less than EUR 1 billion.

AFG takes note of this additional degree of freedom. However, asset managers want to be able to choose whether to pay for external research via bundling, P&L or RPA (resource payment account). Their choice may differ (and be mixed) depending on the type of portfolio, tax considerations or supplier constraints. It is therefore complex to put in place a bundling process that does not hinder the principle of best execution, but this choice can sometimes be useful for the asset management company and its clients.

The consultation also covers the correct methods for estimating external research. Portfolio management companies already have robust processes in place, with or without trial periods.

In its responses, the AFG also calls for non-financial analyses (e.g. ESG) to be included in the spectrum of research and for those based on artificial intelligence to be included.