Banks Primed to Slash Analyst Jobs by 30% as MiFID II Looms
- New reporting regulations under MiFID II will force banks to disclose research spending.
The banking sector has been one of the hardest hit in terms of job cuts over the past couple years – this trend may only worsen as lenders look to scale back research costs ahead of MiFID II, with analyst jobs looking to be next on the proverbial chopping block, per a McKinsey & Co. study. The upcoming regulations will force banks and venues to disclose research costs to investors, which during such lean times is likely to winnow the pool of analysts and similar personnel.
The London Summit 2017 is coming, get involved!
MiFID II’s regulatory framework is slated to dramatically transform the financial services industry this January. While the new legislation will foster improved transparency, reporting standards, and other Obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term, one consequence could mean the curtailing of research spending by banks. Up until now, banks and asset managers were not obligated to publicize research costs – rather these services were integrated into trading costs in many instances, in essence not incurring any cost.
No more free rides
This arrangement will be coming to an abrupt end in January 2018, as MiFID II will require the publicizing of research costs to investors. With the banking sector already in the midst of a multi-year restructuring process, previously adopted ‘lean and mean’ strategies by lenders portend sizable contractions in the research sector. According to the McKinsey & Co. study, new regulations in Europe stifling free research will lead to the axing of hundreds of analyst jobs as banks plan to trim upwards of $1.2 billion in research spending.
The report put out by the consultancy could be a devastating blow to the research sector, which thus far has managed to escape the same fate as other banking jobs, i.e. back-office and IT positions. Consequently, the report estimates that the collective $4.0 billion that is spent from the top 10 Sell-Side Sell-Side Those in the financial industry involved with the production, marketing, and the sale of bonds, forex, stocks, and other financial instruments constitute the sell-side.Products and services produced by the sell-side are geared towards those who on the buy-side. You can think of the sell-side and buy-side like a coin, you cannot have one side without the other. The sell-side is comprised of individuals, firms, fintech companies, and market makers, who are responsible for providing liquidity in th Those in the financial industry involved with the production, marketing, and the sale of bonds, forex, stocks, and other financial instruments constitute the sell-side.Products and services produced by the sell-side are geared towards those who on the buy-side. You can think of the sell-side and buy-side like a coin, you cannot have one side without the other. The sell-side is comprised of individuals, firms, fintech companies, and market makers, who are responsible for providing liquidity in th Read this Term banks annually will be trimmed by upwards of 30 percent as clients exercise greater restraint on what they pay for.
‘Their’ turn
Moreover, the trend may also simply represent a calibration of job cuts as the research sector has lagged well behind the sales and trading space in this regard. Indeed, since 2011, cash equity research headcount has fallen by only 12 percent, relative to 40 percent for the sales and trading sector, citing the report.
The changing regulations also call into question a broader issue, that being what the actual cost of research itself is, given that it has historically been integrated into other services. With lenders looking to put sour earnings reports and revenues behind them, the industry could be seeing wider cuts in H2 2017 ahead of the eventual passage of MiFID II.
The banking sector has been one of the hardest hit in terms of job cuts over the past couple years – this trend may only worsen as lenders look to scale back research costs ahead of MiFID II, with analyst jobs looking to be next on the proverbial chopping block, per a McKinsey & Co. study. The upcoming regulations will force banks and venues to disclose research costs to investors, which during such lean times is likely to winnow the pool of analysts and similar personnel.
The London Summit 2017 is coming, get involved!
MiFID II’s regulatory framework is slated to dramatically transform the financial services industry this January. While the new legislation will foster improved transparency, reporting standards, and other Obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term, one consequence could mean the curtailing of research spending by banks. Up until now, banks and asset managers were not obligated to publicize research costs – rather these services were integrated into trading costs in many instances, in essence not incurring any cost.
No more free rides
This arrangement will be coming to an abrupt end in January 2018, as MiFID II will require the publicizing of research costs to investors. With the banking sector already in the midst of a multi-year restructuring process, previously adopted ‘lean and mean’ strategies by lenders portend sizable contractions in the research sector. According to the McKinsey & Co. study, new regulations in Europe stifling free research will lead to the axing of hundreds of analyst jobs as banks plan to trim upwards of $1.2 billion in research spending.
The report put out by the consultancy could be a devastating blow to the research sector, which thus far has managed to escape the same fate as other banking jobs, i.e. back-office and IT positions. Consequently, the report estimates that the collective $4.0 billion that is spent from the top 10 Sell-Side Sell-Side Those in the financial industry involved with the production, marketing, and the sale of bonds, forex, stocks, and other financial instruments constitute the sell-side.Products and services produced by the sell-side are geared towards those who on the buy-side. You can think of the sell-side and buy-side like a coin, you cannot have one side without the other. The sell-side is comprised of individuals, firms, fintech companies, and market makers, who are responsible for providing liquidity in th Those in the financial industry involved with the production, marketing, and the sale of bonds, forex, stocks, and other financial instruments constitute the sell-side.Products and services produced by the sell-side are geared towards those who on the buy-side. You can think of the sell-side and buy-side like a coin, you cannot have one side without the other. The sell-side is comprised of individuals, firms, fintech companies, and market makers, who are responsible for providing liquidity in th Read this Term banks annually will be trimmed by upwards of 30 percent as clients exercise greater restraint on what they pay for.
‘Their’ turn
Moreover, the trend may also simply represent a calibration of job cuts as the research sector has lagged well behind the sales and trading space in this regard. Indeed, since 2011, cash equity research headcount has fallen by only 12 percent, relative to 40 percent for the sales and trading sector, citing the report.
The changing regulations also call into question a broader issue, that being what the actual cost of research itself is, given that it has historically been integrated into other services. With lenders looking to put sour earnings reports and revenues behind them, the industry could be seeing wider cuts in H2 2017 ahead of the eventual passage of MiFID II.