August 16, 2019

Could you please elaborate on the regulatory requirements in UK and Europe that are driving demand for Morningstar Data and Morningstar Direct?

MiFID II continues to be a driver of Morningstar Data revenue as distributors cannot distribute a fund manager’s products unless the fund managers provide the product information required by MiFID II. Compliance requires a significant amount of data collection and processing to support the production of content that can then be disseminated by the distributors. Morningstar provides data that is essentially licensed for use in this content.

Regulation has less of an impact on Morningstar Direct revenue; however because MiFID II data and content can be accessed through Morningstar Direct, asset managers have purchased additional seats for areas of their business that support product creation and distribution for the reasons mentioned above. Furthermore, we’ve found that the rise of ESG investing, and the fund management mandates that have followed suit, have driven additional reporting requirements, which has had a slightly positive impact on Direct’s seat growth as well.

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