Survey Suggests Independent Research Least Harmed By A Research Commission Ban

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As European regulators plan to delink research payments from commissions, a new survey conducted by Integrity Research Associates indicates asset managers anticipate research cuts

Integrity Research Associates, a consultancy specializing in the global investment research industry, released a new survey in which asset managers expect that mid-sized and regional investment banks were most likely to see research payment cuts if regulators ban the ability to pay for research with client commissions. Independent research providers are expected to be the least likely to be cut.

The latest draft of Europe’s Markets in Financial Instruments Directive (MiFID II) bans the ability to pay for investment research with client commissions, heralding major changes in the way asset managers pay for investment research. In response, Integrity Research conducted a global survey of asset managers to gauge their likely reactions to the new legislation.

“Asset managers are uncertain about how to react to the new regulation but in our survey most felt that research payments will fall. All types of research providers are likely to see cuts, but independents seem best positioned under the new regime,” said Sanford Bragg, Principal at Integrity Research.

The survey, conducted in March and April 2015 through an anonymous online survey, had ninety nine asset manager respondents of which nearly 80% of respondents were investment managers with 11% being asset owners and 10% hedge fund advisors. Over three quarters of respondents managed at least US$10 billion in assets, with 25% managing over US$100 billion. In aggregate, respondents reported spending US$1.9 billion in equity commissions in 2014 of which US$884 million were for research payments.

Nearly half of respondents (48%) were registered in Europe with 40% in North America and 11% in Asia.

“Asset managers based in Europe will feel the brunt of the new regulation, but U.S. asset managers are watching developments closely, especially those with global clients,” said Michael Mayhew, Founder and Principal at Integrity Research.

In the survey, asset managers were asked to rank research providers based on those types most affected and least affected by potential reductions in research payments. Mid-sized and regional investment banks were ranked as the providers most likely to be affected by cuts while independent research providers were ranked as those least likely to be affected.

The twenty-seven question survey covered a wide range of commission management practices from compliance due diligence, voting systems, budgeting and expected use of proposed Research Payment Accounts being proposed by European regulators. Subscribers to Integrity’s ResearchWatch service can access the full 35-page report at

About Integrity Research Associates LLC

Integrity Research Associates, LLC is an advisory firm specializing in the global investment research industry. The firm advises a select number of hedge funds and asset managers on finding unique research, data and analytics used to enhance investment returns, and has been conducting due diligence on external research providers for over a decade. The firm also provides news and commentary on the research industry in its ResearchWatch service. For more information go to

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Sanford Bragg
Integrity Research Associates LLC
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