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Small-caps yet to feel research pinch

Small-caps yet to feel research pinch

It is always nice when things turn out better than expected. One of the concerns about Mifid II (the updated markets in financial instruments directive), introduced at the start of 2018, was that a requirement to be explicit to clients about research costs would lead to a scaling back in analysis. Mooted potential consequences were a reduction in small-cap coverage, adversely affecting the ease with which they could be bought and sold. It is still early days, but research by Scott Evans, Paul Marsh and Elroy Dimson of the London Business School (LBS) has shown no such effect on market liquidity.

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