Is the end of “free” institutional bank research upon us?

TABB Group released its 12th annual Institutional Equity Trading report and highlighted a major trend regarding the cost of institutional research and commissions patterns, one also noted in ValueWalk last September. That trend is gaining trend strength. The report pointed to buy-side firms where nearly one-quarter of the broker list receives three-quarters of the commissions, and higher commission costs is in part due to research. This highlights a trend change. In 2016, one-third of asset managers and nearly one-quarter of hedge funds expect to decrease their broker lists, and research could be a factor. Bank and independent brokerage research, which has been traditionally baked into the commission cost, is increasingly being separated and could lead to a change in how such research is consumed and structured.

Brokerage and bank research costs are typically baked into the commission


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