http://www.integrity-research.com/cms/2010/02/01/research-is-king/ Tracking developments in the research industry Mon, 01 Aug 2011 14:06:50 +0000 hourly 1 http://wordpress.org/?v=3.1.3 http://www.integrity-research.com/cms/2010/02/01/research-is-king/comment-page-1/#comment-737 sewalton Mon, 01 Feb 2010 12:36:51 +0000 http://www.integrity-research.com/cms/?p=2345#comment-737 . There is one very significant distinction between the US and the UK that effects the conclusion that execution is getting even more concentrated with the bulge bracket. The number of CSA counterparties for the buy-side in the UK actually has gone up, although this doesn’t necessarily mean that execution volumes have been correspondingly equally distributed. Part of this was due to risk mitigation after the crash; clients opened up more pots with the intention of emptying them every month, so no balances. But part of it is due to local regulation; investment banks (the bulge bracket) can and do get checks from for research from any pot, because there is real unbundling. This doesn’t happen in the US due to a convenient interpretation of the Securities Act of 1940 requiring the institution to be registered as an investment advisor in order to be a check getter. So, at the end of the day, clients in the UK aren’t directly or indirectly forced to trade with an institution in order to get its research so they are more likely to have a pots with more brokers of their choice. . There is one very significant distinction between the US and the UK that effects the conclusion that execution is getting even more concentrated with the bulge bracket. The number of CSA counterparties for the buy-side in the UK actually has gone up, although this doesn’t necessarily mean that execution volumes have been correspondingly equally distributed. Part of this was due to risk mitigation after the crash; clients opened up more pots with the intention of emptying them every month, so no balances. But part of it is due to local regulation; investment banks (the bulge bracket) can and do get checks from for research from any pot, because there is real unbundling. This doesn’t happen in the US due to a convenient interpretation of the Securities Act of 1940 requiring the institution to be registered as an investment advisor in order to be a check getter. So, at the end of the day, clients in the UK aren’t directly or indirectly forced to trade with an institution in order to get its research so they are more likely to have a pots with more brokers of their choice.

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