LONDON (Reuters) – Fewer analysts are covering British companies and the quality of their reports has declined since the introduction of European Union regulations aimed at increasing transparency in financial markets, according to a survey published on Monday.

More than half of UK companies reported a year-on-year decline in the number of analysts covering them and 38% said there had been a fall in the quality of research, Citigate Dewe Rogerson’s annual survey of nearly 500 investor relations officers at global companies.

The EU Markets in Financial Instruments Directive (MiFID II) implemented in January 2018 forced banks and brokers to charge investors for equity research, which has meant asset managers are unwilling to pay as much for research.

Market regulators in the UK and France have raised concerns over the past year about the impact of a subsequent decline in research coverage and trading liquidity for smaller firms.

Britain’s Financial Conduct Authority (FCA) concluded last month that the reforms have cut the cost of stock and bond research, saving millions of pounds for investors without materially affecting coverage of smaller firms.

The impact was less pronounced in Europe, according to the financial communications’ survey.

Almost 40% of investor relations managers of European companies, excluding the UK, said there was a decline in the number of analysts covering their companies but only half of these managers said the coverage deteriorated year on year.

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