Will MiFID II tame the investment services industry of the Baltic Tigers?

Abstract

Purpose

The purpose of this paper is to assess the impact of the markets in financial instruments directive II (MiFID II) on investment services in the Baltic states.

Design/methodology/approach

The authors take an exploratory, qualitative approach, based on data conducted from interviews with nine investment industry professionals using the laddering technique. The pool of experts was selected using the purposeful sampling method, and experts must have had a minimum of five years investment experience in the Baltics, working familiarity with MiFID II, and a university education in the fields of finance or economics.

Findings

The strict requirements of MiFID II reduce the range of available investment products and services for customers in the Baltics. Also, the profitability of Baltic investment companies decreased due to high compliance costs and bans on inducements. The results indicate that this may lead to increased barriers to entry and mergers and acquisitions for small investment companies.

Originality/value

To the best of the authors’ knowledge, this is the first attempt to research the implications of MiFID II implementation in the Baltic states. The qualitative approach chosen offers a unique opportunity to highlight the critical effects of MiFID II on financial intermediates in smaller geographical markets.

Citation

Huettinger, M. and Krašauskaitė, A. (2019), "Will MiFID II tame the investment services industry of the Baltic Tigers?", Qualitative Research in Financial Markets, Vol. 12 No. 3, pp. 315-331. https://doi.org/10.1108/QRFM-12-2018-0141