2026 poised to reshape research funding with return to bundled payments and data focus

Andrew Quick, global head of execution at Rothschild & Co Global Markets Solutions, says 2026 is likely to mark a decisive shift back towards bundled payments for research and execution, a move he and other market participants argue will restore flexibility and broaden access to differentiated analysis. According to The Trade News, Rothschild & Co has engaged more than 250 UK and EU asset managers on the topic and reports clear momentum for joint payments, with major asset managers and dealing desks preparing commission sharing agreement (CSA) arrangements.

Regulatory change has been the key enabler. The Financial Conduct Authority finalised rules in May 2025 that permit fund managers to pay for research and execution jointly, subject to conditions, and the European Securities and Markets Authority has consulted on amendments to the MiFID II Delegated Directive to align the law with new payment options and to strengthen the annual assessment of research quality. An EU directive adopted in 2024 removed the EUR1 billion market‑capitalisation threshold that previously limited bundled payments for research on smaller issuers, widening the universe of research that can be jointly funded. Industry commentators say these steps aim to boost the competitiveness of UK and EU capital markets at a critical moment for active managers.

Supporters of the change point to the unintended consequences of the MiFID II unbundling regime. An EU study cited by the European Union found that MiFID II coincided with reduced research budgets, lower equity research prices and declining coverage, especially for small and mid‑cap companies. Proponents argue that joint payments will reverse some of that decline by restoring predictable funding for differentiated research and by reducing the operational burdens that pushed some providers out of the market.

There are early signs that research spending is recovering. Data reported by The Trade News and Substantive Research shows research budgets rose in the first half of 2024, US budgets by about 15% and European budgets by roughly 4%, suggesting a partial rebound in external research resourcing, particularly in the United States. Market participants view the regulatory relaxation as likely to accelerate that recovery in Europe and the UK by making it simpler for fund managers to finance high‑quality external analysis.

Not all benefits are purely financial. Craig Butterworth, chief commercial officer at Droit, argues that the trend towards joint payments sits alongside a broader industry shift to a “data‑first” approach to regulatory decision‑making. Speaking to The Trade News, he said banks and asset managers are pushing regulatory checks further upstream, into client onboarding, new product approvals and legal‑entity booking model design, to reduce costly remediation work downstream. Butterworth contends that better upstream data and governance will cut technology spend and headcount currently devoted to reconciling control breaches, trade breaks and reporting errors.

The conversation about data quality extends into market data itself. Paul Humphrey, chief executive of BMLL, told The Trade News that 2026 will see an irreversible move away from accepting poor‑quality historical data from real‑time incumbents. He said successful AI‑driven strategies increasingly demand engineered, granular, reliable datasets and that firms are shifting from hoarding raw market data to investing in proprietary analytics built on trusted inputs. Humphrey also noted a “buy‑to‑build” recalibration: owning raw feeds is less of a differentiator than what firms build with cleansed, accessible datasets.

Industry voices acknowledge risks and open questions. Regulators insist joint payments must not compromise best‑execution obligations or reduce transparency. ESMA’s consultation emphasises robust criteria for assessing research quality and clear remuneration methodologies for joint payments to avoid conflicts with execution standards. Market participants will have to balance renewed funding for research with governance, reporting and oversight to ensure investor outcomes are protected.

Operationally, the return to bundled models will require new contractual frameworks and systems work. The Trade News reports market desks are drawing up CSA agreements, but legal, compliance and middle‑office teams will need to adapt processes to allocate costs, demonstrate value and meet the conditions set by the FCA and EU rules. Some sell‑side firms and independents that exited the research market after unbundling may not return, while others see an opportunity to rebuild sustainable business models.

Taken together, the regulatory changes, rising research budgets and renewed emphasis on high‑quality data signal a potential renaissance for active research in UK and EU markets. According to industry participants quoted by The Trade News, the shift could restore coverage particularly for mid and small caps, improve the information available to portfolio managers and, ultimately, support better investment outcomes, an outcome that many in the sector say would be welcome at the start of 2026.