Six months ahead of the MiFID II (Markets in Financial Instruments Directive) implementation deadline, alternative asset managers still face uncertainty, with 34% of firms undecided for example on how to pay for research, according to a survey by the Alternative Investment Management Association (AIMA).

Fund managers globally cited as their biggest MiFID challenges uncertainty around what the MiFID II rules mean – both their scope and substance – as well as what they perceived to be a lack of clarity relating to the cost and nature of services provided by brokers.

The AIMA survey showed that, among the two-thirds of alternative asset managers that have made decisions around how to pay for research, 80% plan to charge investors and the remaining 20% intend to absorb the costs themselves.

With MiFID II rules requiring firms to decide how they will report trades to the regulator and the market, the survey found that 75% of firms plan to self-report to their regulator. Meanwhile, 50% intend to delegate some of the responsibility to one or more brokers. The findings indicate that some investment management groups will not necessarily limit themselves to a single reporting mechanism.

When publishing details of executed trades to the market – which helps set market prices – 33% of alternative asset managers plan to self-report, while the remainder plan to have brokers report their trades.

Additionally, half of alternative asset managers with offices outside the EU said they intend to apply MiFID II best execution policies globally. This figure jumps to 90% for alternative asset management firms that delegate portfolio management from the EU to a third country.

AIMA’s CEO Jack Inglis said: “Complying with MiFID II is a significant undertaking and understandably many members are needing to rely on the broker community to provide solutions. This survey shows not only that a substantial amount of uncertainty remains but also that the industry is working hard to meet the January 2018 deadline. Alternative asset managers face further increases in compliance costs and we will be working hard with members and regulators to ensure concerns are addressed, and avoid any fallout in six months’ time.”