A period of
severe turmoil is facing the securities research industry as a
regulatory overhaul threatens the way investment research is done.
Online
portals, in particular, are set to gain market share at the expense of
major "bulge bracket" investment banks, reaching a forecasted market
share of $1.4 billion or 15 percent of the global investment research
industry spend by 2020 - from less than 1 percent last year.
"The global investment research market is on the cusp of major disruption," said Benjamin Quinlan, CEO of Hong Kong-based Quinlan & Associates and author of a report on the challenges facing the research sector.
Forcing the change are new rules, known as Markets in Financial Instruments Directive, or MiFID II, due to take effect in January 2018 aiming to make European securities markets more transparent.
A key aspect of these rules is that investment banks must charge fund managers an explicit fee for research rather than bundling the cost into trading commissions charged to clients, as at present.
Though banks have scrambled to reorganize their research functions by focusing on top-tier clients to minimize costs, rolling out proprietary portals, or adopting a model where clients pay for research depending on what they need, analysts say the sheer volume produced on a daily basis means the research effort has a long way to go before becoming efficient.
"The global investment research market is on the cusp of major disruption," said Benjamin Quinlan, CEO of Hong Kong-based Quinlan & Associates and author of a report on the challenges facing the research sector.
Forcing the change are new rules, known as Markets in Financial Instruments Directive, or MiFID II, due to take effect in January 2018 aiming to make European securities markets more transparent.
A key aspect of these rules is that investment banks must charge fund managers an explicit fee for research rather than bundling the cost into trading commissions charged to clients, as at present.
Though banks have scrambled to reorganize their research functions by focusing on top-tier clients to minimize costs, rolling out proprietary portals, or adopting a model where clients pay for research depending on what they need, analysts say the sheer volume produced on a daily basis means the research effort has a long way to go before becoming efficient.
No comments:
Post a Comment