Integrity Research Releases Research Pricing Study Benchmarking Research Fees

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Global survey of investment banks and independent research firms helps asset managers prepare for new regulations unbundling research payments from trading

Integrity Research Associates LLC today released a major new study of research pricing designed to make it easier to put a value on investment research, as both asset managers and research providers grapple with the challenge of pricing research.

“Most institutional equity research is still bundled with trading commissions, so neither the consumers nor the producers have a clear idea of how to price it,” said Integrity founder Michael Mayhew. “To provide some clarity, we’ve surveyed investment banks and independent research firms to gauge how they get paid for investment research services.”

The 115-page study examines average and maximum payments to research providers, as well as differentiating fees across a variety of metrics. “Top-tier independents hold their own when compared with large investment banks in the average research-related payments they received from buy-side clients, but there is a big disparity in the maximum payments received,” said study author Sanford Bragg, a principal at Integrity Research. “In large part that reflects the broader level of service that the larger banks provide such as waterfront coverage and a deeper set of research offerings.”

Disparate research payments between independents and investment banks also reflect differences in payment process. The majority of investment banks currently receive the bulk of their research revenues through directed commissions, whereas the majority of payments to independents are in cash or through commission sharing agreements which separate execution costs from research payments.

“Our analysis of fee structures suggests that research providers who mainly rely on asset managers to set values for research fare better than research providers with explicit pricing for research,” said Bragg. “However, explicit pricing is not without its benefits to research providers, such as greater revenue predictability and an improved ability to get paid for add-on services.”

Asset managers can use study results to compare their budgeted research payments to the payment ranges reported by research providers in the study. Average payments to top-quartile IRPs or top-quartile banks provide guidance on typical payment levels while the maximum payments give upper bounds. In addition, the study also captures typical fees for sector-level and regional research services.

For research providers, the study provides benchmarks for their own pricing levels, particularly for brokers who are moving toward more defined pricing structures.

Regulators in Europe are requiring brokers to more explicitly price their research services as part of reforms to research payment practices under MiFID II, which goes into effect January 3, 2018.

Integrity Research opened the research pricing survey, which previously had exclusive to independents, to all research providers and received a strong response from investment banks. Over 40% of the 161 research firms participating in the study were investment banks. The survey was conducted from December 16, 2016 to January 30, 2017 through an anonymous online survey.

To learn more about the study, go to    

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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