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The study sheds light on the black box that is research pricing, after 2018’s European regulations known as MiFID II forced investors to unbundle such payments from trading fees.
The survey shows research shops in Europe are making less than peers elsewhere, adding to signs the new rules have shrunk budgets for stock and bond analysis. Having opted to pay for research out of their own pockets rather than clients’, asset management firms in the region are squeezing providers for every penny. While there’s often a set price for reading reports, everything else -- analyst calls, bespoke financial modeling, conferences -- is mostly up for negotiation, leading to a wide range of costs.
“In the end the explicit pricing only came to the entry fee and the written research,” Sanford Bragg, principal at Integrity Research, said in a phone interview. “It really still is a function of that negotiation, and obviously the trend since the global financial crisis has been for the buy side to pay less.”
Europe’s experience is especially relevant as U.S. regulators also field growing calls for similar rules designed to make fees more transparent. The survey also shows banks get bigger checks overall from clients than independent research providers, lending credence to the argument that unbundling has put the latter at a disadvantage. [...]