Equity Research Worth Paying For: How Regulation and Tech Impact Business Models

Equity research payments are due for massive disruption as the EU MiFID 2 Directive comes into effect in January 2017. The industry is expecting that it will separate research from execution, leaving both buy-side and sell-side pondering how to price and pay for research on its own.

On November 3, 2015, Slator held an executive roundtable at the Conrad Hotel in Hong Kong sponsored by Lionbridge on the future of equity research payments and the oncoming disruption brought about by EU MiFID 2. Participants included senior decision makers from Deutsche Bank, BNP Paribas, Morningstar, UBS, Nomura, CIMB, SocGen, Citibank, Shenwan Hongyuan, and others. This report, developed in cooperation with roundtable guest speaker Fabrice Bouland, CEO of Alphametry, provides an overview of the presentation and talking points discussed during the roundtable. “The upcoming MiFID II regulation is targeting Europe but the investment banks are well aware that any regional change of rules will have a profound impact on the industry globally,” Bouland commented on the urgency of the topic.


Roundtable participants held active discussions on the issues of pricing, technology, and distribution. “Discussions were hard but honest, posing the complex and central issue of how to value research. Research is content but also a service, making it hard to find a fair price for very different customers. The current lack of benchmarks, as well as the opacity of the industry, add to the difficulties, ” Bouland said, “But pricing has started, pushed by independents and some of the investment banks. Furthermore, rising distribution platforms shall bring the necessary price discovery in aggregating and finding new curation models for the equity research.”


Topics covered include:

  • The EU MiFID 2 directive
  • Current state of equity research
  • Factors that affect equity research: revenues, content, and supply
  • Background of regulatory unbundling of research from execution
  • The state of commission sharing agreements (CSAs)
  • The proposed research payment account (RPA) scheme
  • Factors that complicate equity research pricing
  • Consequences of unbundling brought about by MiFID 2
  • Challenges in valuing research
  • Trends that accelerate equity research transformation

Download the report here:

Slator Report: Equity Research Worth Paying For

1.14 MB