Following the FCA’s publication of the Conflicts of Interest document in 2012, and the subsequent consultation paper, Consultation on the use of dealing commission rules, in November 2013, Edison Investment Research and Frost Consulting have published a white paper on the Future of Equity Research.
The white paper finds that regulatory change has had a significant impact in shaping the equity research ecosystem. The proposed changes to the regulations in the FCA papers have the potential to be some of the most significant catalysts for change the industry has seen in a century.
If the FCA’s proposals remain intact, the authors see six key short-term impacts on the equity research industry:
• A continuation of the trend of a separation of revenues generated from the trading of securities and the payments for research services
• Research produced from investment banks moving from an unpriced to a priced environment
• An opening of the content universe available to asset managers
• Continued shrinkage of the overall payments made for research services to investment banks
• A reallocation of spend to research providers
• A continued consolidation on both the buy side and sell side
Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Berlin, Sydney and Wellington.
Published: 4 February, 2014