Castine Consulting LLC, a software firm focused on commission management and related services, is launching a new version of a solution designed to help brokers manage their fees associated with research.
The service, named Spinnaker, records the fees negotiated with each client, collects interactions and generates invoices. The software stores a history of price permutations and their effective dates, with the flexibility to handle various fee structures including tiered or one-off pricing.
Interactions are stored in a central “Interaction Warehouse” for reporting and pricing while linking to accounting programs to send or receive information on customized invoices and payments. Consolidated interaction review, pricing, and distribution are built-in. Interactions data includes analyst meetings, conferences, roadshows as well as readership statistics and call logs.
Data can be viewed on a “Research Timeline” where sales staff can scroll through a historical ribbon showing services that the client has received as preparation for client negotiations. Fees and revenues can be modeled based on standard fee schedules or client-unique negotiated agreements. Revenues are allocated to the various groups contributing to the research product.
Castine sells the research pricing module as a standalone module or as a component of its C3 Suite, which includes commission management, compensation calculations for trading staff, and compliance due diligence questionnaire submissions. The firm is also testing a module for tracking the execution rates negotiated with each client.
Founded originally in 1982, Castine Consulting is a financial technology firm run by serial entrepreneur Robin Hodgkins. Prior to Castine Consulting, the firm’s principals owned Cogent Consulting, a leading broker vote and commission management system sold to BNY Convergex in 2009, which is now owned and operated by Eze Software.
Our Take
As elaborated in our latest research pricing study, investment banks reacted to MiFID II by assigning subscription fees to written research (often at a low price point), while negotiating premium fees for high touch services such as access to analysts. Although the strategy of negotiating one-on-one premium fees with each client has been largely successful in maximizing research revenues for banks, it is difficult to administer, especially with the added burden of contracting and invoicing research services. In many respects, institutional sales staff have become administrators, alienating some.
Many banks have been upgrading their CRMs to accommodate their new pricing regimes and maintain the sort of information that Castine is seeking to optimize. Many different outsourced solutions are providing CRM support, such as Singletrack and research authoring platforms like Analec, Blue Matrix and Quark. However, Castine seems to be one of the first to directly target pricing as an increasingly explicit and stand-alone activity.