New York – Paul Myners, author of the Myners report which spurred the U.K.’s Financial Services Authority (FSA) to require greater commission transparency, joined London-based Autonomous Research LLP as chairman and partner.
Autonomous, an independent research boutique set up by former Merrill Lynch banking analyst Stuart Graham, officially started business in September 2009. According to documents filed with Companies House, the firm made an operating profit of £4.4m (approximately $7 million) on revenues of £5.5m (approximately $8.8 million) for the period from September 2009 to March 31 2010. The profit to be divided among the members amounted to £3.6m ($5.8 million). The firm sets aside 5% of the profit pool to donate to charity each year.
Lord Myners, best known for running fund manager Gartmore in the 1980s and 1990s, said the role at Autonomous was a natural progression. “In the report I wrote for government exactly 10 years ago, I talked a lot about how banks’ research should be unbundled from other bank business,” Lord Myners said. “It sounds evangelical but I’m a great fan of the City doing the right thing. I have a real enthusiasm for high quality independent research.”
The going rate for a UK ex-Cabinet minister, is said to be around $300,000 a year for a few days work each month. The primary benefit to Autonomous is Lord Myners’ extensive contacts, but given his previous role in HM Treasury, he can also offer insights on regulatory developments impacting the financial sector. Lord Myners will invest in Autonomous, though the amount was not disclosed.
Autonomous now covers 65 European bank and insurance stocks, both from an equity and debt point of view. It restricts itself to 100 clients, half of which are hedge funds and half of which are long-only fund managers.
The firm employs approximately 13 analysts, focusing on banks, insurance and financial credit. It has three dedicated salespeople and recently added two sales traders to build in-house agency brokerage capabilities.
Autonomous plans during 2011 to develop direct trading relationships with clients, allowing clients to pay for its research with bundled commissions which will boost revenues and profitability further. According to Graham, “We’re happy to use commission-sharing arrangements, but a number of our clients said they would prefer to deal with us on an agency trading basis, and we expect a significant number to do so when we’ve launched.”
It is ironic that Lord Myners, the symbol of commission transparency, is joining a firm which is making bundled commissions a priority, but that is the sign of the times.