managers’ consumption of analyst notes is set to
substantially change as the January 2018 MIFID II deadline
approaches, according to new research, threatening the leading
position of investment banks in the sector.
Pre-MIFID II investment banks can bundle research notes, and
other services such as access to analysts, with execution costs
so they do not usually attract an explicit fee. Post-MIFID
research must be unbundled and charged for
survey of asset managers by RSRCHXchange found that
of respondents expect the top nine investment banks to
constitute less than 60% of their future research spend. The
online aggregator and marketplace for institutional research
surveyed 234 asset managers (92% based in Europe) representing
expect to pay for research from all nine of the largest banks
and 72% expected to use research from five or fewer
Vicky Sanders, co-founder
of RSRCHXchange, said: "Even the biggest asset management firms
globally rely on niche outside expertise. The buy-side will pay
for research – it’s very important for
either the investment banks or independent providers to produce
research that clients need.
will be ever more important to be niche – to
specialise and be an expert in an area."
The global investment banks tend towards providing
comprehensive coverage. However, when the buy side is compelled
to pay it is expected to become more discriminating. Sanders
estimates that only 5% of analyst emails are actually read so a
more targeted approach is expected to develop.
would not surprise me to see some investment banks changing
their business model – maybe to reduce their coverage
or focus on their strengths," she says.
surprising finding was the value placed on various research
offerings. Written research was the most highly prized
(especially daily) followed by corporate access, analyst
models, analysts meetings, analyst calls, group meetings,
bespoke research and finally sales calls. It appears that some
of the services provided more commonly by the biggest firms are
considered of less importance.
survey found that 16% of asset managers were already compliant
with MIFID II and a further group of the same size expect to be
compliant before the summer. However, it also found that 50% of
respondents are still undecided on how they will pay for
research under MIFID II so there is still much to play
Jeremy Davies, co-founder of RSRCHXchange, added: "The
landscape of institutional research is shifting and asset
managers are reviewing and adjusting their working practices to
keep pace. Some of the results of this survey will come as a
surprise to the industry, especially the decline in research
spend with the big banks."
provides a cloud-based marketplace for research. It does not
charge buy-side firms for its portal but receives a commission
on any subscriptions they take from research providers. It
currently offers research from 185 providers, including
investment banks and independent firms, and adds new sources
when requested by buy-side firms.