“Buy-side and sell-side firms have been negotiating
over research pricing since late last year and many are
now approaching an end to those negotiations, which
should start to give a much clearer picture of pricing in
the coming months,” said Sanders.
One trend recently observed by The TRADE, which
may give some insight into what the buy-side thinks
about hard dollar research pricing, is that a number
of firms are declaring they will forgo using commission sharing agreements (CSA) and research payment
accounts (RPA), preferring instead to pay for research
out of their own funds.
The issue of how to handle separate research
payments has been one of the most difficult for asset
managers. It was thought that most would prefer to
use a CSA/RPA model, which would function similarly
to how research is paid for today, as paying for this out
of squeezed profits, or through raising client fees, were
both seen as being unpalatable.
But with a number of firms, including JP Morgan Asset Management, M&G and PIMCO, choosing
to pay for research themselves, it
may suggest that the research is
not nearly as expensive as they expected it to be, making paying for
it from their P&L more achievable
than previously thought.
A study conducted by Survation
for RSRCHXchange in June found
that 23.3% of firms plan to pay for
research from the P&L, the largest
group other than those that are
undecided (which make up 35.8% of
responses). Just 8.7% plan to directly charge clients for research, while
10% will use a CSA-like model and
14.2% will operate a mixed model.
“Buy-side and sell-
side firms have been
negotiating over research
pricing since late last
year and many are now
approaching an end to
VICK Y SANDERS, CO-CEO, RSRCHXCHANGE