Banks Publish Research Costs Ahead of MiFID II, Revealing Industry Disparity

UBS and JPMorgan revealed the lowest priced equity research packages in the industry, starting at $10k.

Over the past month, banks and asset managers have begun disclosing their research packages for clients. Under the upcoming MiFID II regulatory shift, these venues will be obligated to publish their research spending costs – UBS has become the latest lender to release its figure, charging as low as $40,000 a year for equity research.

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The number pales in comparison to other lenders, many of which have for the first time have gone public with these once private costs. Disclosing all research spending and by extension analyst costs will be mandatory in January 2018 with the implementation of MiFID II.

The upcoming regulatory framework is set to dramatically transform the financial services industry, and could impact thousands of jobs as well. While the new legislation will foster improved reporting standards, and other obligations, one consequence could be the curtailing of research spending by banks in light of more transparent pricing.

UBS’ research offering of $40,000 ranks as relatively cheap relative to its rivals, with Credit Agricole recently unveiling a package worth up to $137,000 a year – its basic package starts at $68,000 per year. Of note, these figures vary with additional fees depending on the level of service, frequency of use and calls or meetings with analysts, according to a recent Bloomberg report.

Wide-ranging research packages

Looking at the rest of the banking field, thus far Barclays has released the most expensive option for clients, charging potentially $464,000 for its top-level research package. JPMorgan has released a package charging as low as $10,000, thus far the lowest in the industry for equity research.

The transparency surrounding equity research however is not exactly a welcome development. The move could have unintended consequences, namely asset managers and other units trimming costs. A recent study published by McKinsey & Co. estimated that the collective $4 billion that is spent from the top 10 sell-side banks annually could be trimmed by upwards of 30 percent as clients exercise greater restraint on what they pay for.

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