Recent Harvard Business School Grads Hardest Hit
Apparently, European investment banks will have to start charging for research that, apparently, no one reads (emphasis added)
"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.
...For example, about 40,000 research reports are produced every week by the world's top 15 global investment banks, of which less than 1 percent are actually read by investors, according to Quinlan.
When I was there, an enormous number of Harvard Business School grads got their first post-b-school job as analysts writing just such reports.
ErikTheRed:
"And nothing of value was lost."
June 23, 2017, 9:43 amNone:
They probably meant to write "of which are actually read by less than 1% of the receiving investors", or at least that's probably what the stats say.
June 23, 2017, 9:58 amcraftman:
Yeah I was confused with that. Are most reports completely ignored and a select few are widely read and reported on? If so - do you know beforehand which reports will be blockbusters? Probably not, so you might be willing to pay for tons of research in the hopes that a few make a big impact. Like pharma R&D.
June 23, 2017, 10:57 ammesaeconoguy:
A side issue which arises as a result of MiFID II is what constitutes research.
Conversations with desks? Informational notes or emails?
Regulation of financial information including research and market color has gotten so granular that simple conversations between desks are now tightly scrutinized.
June 23, 2017, 5:15 pmJose Camoes Silva:
Regulatory micromanagement much? Next on the slate, how to cost-charge square footage and coffee mugs. (These reports are not for reading, they are there to justify trades or advice if challenged by watchdogs.)
June 24, 2017, 1:07 pm