The introduction of new European trading rules last year has resulted in asset managers slashing research budgets by as much as 30% but there is little evidence of a negative impact on the coverage of smaller companies, a multi-firm review by the UK financial regulator has found.

Asset managers previously received market insights as a perk of being a broker’s client. However, the European Union’s revised markets in financial instruments directive, Mifid II, forced asset managers to either pay their brokers for equity research or pass the costs on to investors.