About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Sell-Side Coverage of European Companies Plummets Post-MiFID II, Finds Cass

Subscribe to our newsletter

A new paper from Cass Business School has found that sell-side analyst coverage of European companies has dropped “significantly” since the implementation of MiFID II in January 2018 – with a whopping 334 firms losing their analyst coverage completely.

The paper, entitled ‘The Effects of MiFID II on Sell-Side Analysts, Buy-Side Analysts, and Firms’, examined the effects of the MiFID II research unbundling requirement on all public firms headquartered in European Economic Area (EEA) countries from February 2015 to February 2019.

On average, the analysts who dropped coverage have higher lifetime forecast errors, higher forecast optimism, less experience on the job, and less experience covering the firm dropped – and the research did not find any significant changes in consensus forecast errors or dispersion. However, the remaining analysts are more likely to make sell or hold stock recommendations, their recommendation revisions garner greater market reactions, and their recommendations are more profitable.

In addition, sell-side analysts seem to cater more to the buy-side after MiFID II by providing industry recommendations along with stock recommendations. Importantly, the research found evidence to suggest that buy-side investment firms have turned to more in-house research after MiFID II implementation, and buy-side analysts have increased their participation and engagement in earnings conference calls.

The paper also found evidence of stock-market liquidity decreases post-MiFID II (after taking into account firms’ disclosure responses and changes in analyst coverage).

“MiFID II represented a shake-up of traditional business practices in Europe and has polarised opinion, with some industry figures being highly critical of its introduction.  We should not be surprised that such sweeping regulatory changes have had such a mixed impact,” says co-author Dr Zhongwei Huang.

“Our findings have implications beyond Europe, as investors are currently pressuring the US Securities and Exchange Commission to adopt a similar regulation.”

Subscribe to our newsletter

Related content

WEBINAR

Upcoming Webinar: Managing Non-Financial Misconduct Under SMCR

9 October 2025 11:00am ET | 3:00pm London | 4:00pm CET Duration: 50 Minutes Non-financial misconduct—encompassing behaviours such as bullying, sexual harassment, and discrimination is a key focus of the Senior Managers and Certification Regime (SMCR). The Financial Conduct Authority (FCA) has underscored that such misconduct is not only unethical but also poses significant risks...

BLOG

AI in Finance: Key Insights from the SEC’s Landmark 2025 Roundtable

In late March, the U.S. Securities and Exchange Commission (SEC) hosted a landmark roundtable on artificial intelligence (AI) in financial services. Held in Washington, D.C., the event brought together regulators, technologists, market participants, and legal experts to explore the evolving landscape of AI – from transformative innovation to systemic risk. This wasn’t about rulemaking –...

EVENT

TradingTech Briefing New York

Our TradingTech Briefing in New York is aimed at senior-level decision makers in trading technology, electronic execution, trading architecture and offers a day packed with insight from practitioners and from innovative suppliers happy to share their experiences in dealing with the enterprise challenges facing our marketplace.

GUIDE

AI in Capital Markets: Practical Insight for a Transforming Industry – Free Handbook

AI is no longer on the horizon – it’s embedded in the infrastructure of modern capital markets. But separating real impact from inflated promises requires a grounded, practical understanding. The AI in Capital Markets Handbook 2025 provides exactly that. Designed for data-driven professionals across the trade life-cycle, compliance, infrastructure, and strategy, this handbook goes beyond...