So, the September date looms for ESMA’s final clarification on unbundling. What seems evident is that payment for research with trading commissions is definitely going to be out. What seems less clear, though, is what can still be bundled into the definition of 'execution' and therefore still be paid for in commission dollars. Presumably, post-trade TCA services are included as they could just be thought of as a fancy form of invoice or, in the case of pre- or real-time analytics, as a mechanism that allows customers to monitor what is going on. But what about market data, or the screen and other technical paraphernalia involved in displaying those analytics? What about allocations and trade affirmations that finalise the execution process prior to clearing?

ESMA seems to distinguish between the investment decision (what to trade and why) and the execution decision (where to trade and when). Taken literally then, anything that helps a buy-side decide how to trade an order could legitimately be paid for in commission dollars. But this seems to fly in the face of unbundling’s twin brother - best execution. Surely each buy-side will need to independently assess the execution capabilities of its brokers?

Whilst all the focus has been on how payment for research is going to work in an unbundled world, maybe the smart thing to do is think about what can still be included.