As the global equity research market continues to wrestle with how they will comply with the European Union's MiFID II regulations, we noted a new study from McKinsey & Co. last week which effectively predicted that investment banks will have no choice but to fire a ton of equity research analysts who write a bunch of stuff that no one ever reads...which seems like a reasonable guess.
For those who have managed to avoid this particular distraction, the global equity research industry is in the midst of a major disruption which has been brought on by the European Union’s MiFID II regulations, enforced from Jan. 3, which aim to tackle conflicts of interest by requiring asset managers to separate the trading commissions they pay from investment-research fees.
Of course, while consumers of equity research are quite familiar with its 'value' and thus its inevitable fate (i.e. mass layoffs and consolidation of the highly fragmented market), it has hardly stopped overly-confident bankers from putting their best foot forward and demanding exorbitant fees in a futile effort to maintain the status quo.
Take, for example, the most recent pricing sheet just released by Credit Agricole which proposes that clients pay 400,000 Euros per year to gain access to all the same research they get today for free as the result of simply being a trading client of the bank...but, at least the "Macro Research" is free with every 400,000 Euro purchase.
Or, you could choose the 170,000 Euro 'Basic' package, but you would never be entitled to the honor of speaking with Credit Agrocole's analysts.
Meanwhile, Nomura's $134,000 package announced last week is suddenly looking like a bargain.
Unfortunately, none of these pricing proposals will change the fact that analysts, like the one below, will have to massively cut back on their budgets over the next couple of years...they might even have to restrict themselves to just 4 monitors...the horror.