SEC Staff Extends Temporary No-Action Relief to Broker-Dealers Regarding MiFID II Research Requirements

November 19, 2019

On November 4, 2019, the staff (the “Staff”) of the SEC’s Division of Investment Management extended the temporary no-action letter (the “Temporary Letter”) issued by the Staff on October 26, 2017, to the Securities Industry and Financial Markets Association.1 The Temporary Letter, which was due to expire on July 3, 2020, was extended to July 3, 2023 (the “Extended Period”). For the Extended Period, the Staff stated that it would not recommend enforcement action to the SEC if a broker-dealer provides research services that constitute investment advice under section 202(a)(11) of the Investment Advisers Act of 1940 to an investment manager that is required by the Markets in Financial Instruments Directive II (“MiFID II”) and substantially similar national rules of member states, either directly or by contractual obligation, to pay for the research services from its own money, from a separate research payment account funded with its clients’ money, or a combination of the two. During the Extended Period, the Staff will not consider such a broker-dealer to be an investment adviser.

The Staff stated that the Extended Period will (i) allow it to continue to monitor and assess the evolving impact of MiFID II and evaluate whether any additional guidance or recommendations to the SEC for regulatory actions are appropriate; (ii) give European Union authorities or regulators in individual member states additional time to continue to evaluate MiFID II’s effects and potentially modify their rules; and (iii) allow more time for market-based solutions with respect to payment for research in the U.S. and Europe to evolve further and for greater transparency regarding research payments and practices to develop.


1 See Securities Industry and Financial Markets Association, SEC Staff No-Action Letter (November 4, 2019) available at and Securities Industry and Financial Markets Association, SEC Staff No-Action Letter (October 26, 2017) available at