Managing the de-coupling of sell-side research

Research and unbundling - a clean break

For over 30 years there has been scrutiny and rule-making around the way in which buy-side firms pay for research services from sell-side firms. But there remains an inherent conflict of interest when much of the sell-side research is still paid for out of commissions.

MiFID II makes a clean break in the research-commission link, with important ramifications.
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Research becomes a line item

MiFID II rules are aimed at the practice of paying for services out of trading commissions, under the premise that it encourages both over trading and over use of services.

Instead, research budgets will need to be set in advance and cannot be linked to the volume of transactions. Regulators are expecting fund managers to budget and pay for research in much the same manner as they would budget for any other essential service to the business. Banks, brokers and trading firms have to explicitly charge for execution and research separately.

Valuing research

The implications are that as banks and brokers will be expected to explicitly charge for research separately, they will need to understand how to value and price their service.

A wealth of research at your fingertips

Eikon already provides direct access to research from over 800 active brokerage firms, independent research firms and other sources, covering 21,000 companies across 87 countries.

Thomson Reuters Intelligent Tagging can process internal research and co-mingle valuable in-house insights with external research and multiple additional sources of unstructured data to bring together the best possible aggregated information on which to make decisions.

Our Research Management Console controls access and permissions through usage reporting, providing transparency into what is actually being viewed and what customers find most valuable. All of which can help build more accurate research pricing models and billing schemes.

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