Earlier this month, WeConvene Extel announced the results of its 42nd annual Extel survey, revealing that Morgan Stanley moved up two places to top the charts as the leading pan-European brokerage firm for equity and equity-linked research. Bank of America Merrill Lynch lost its research crown in 2015, slipping one place to second overall, while UBS received a third place overall ranking.
One broker which posted a particularly strong showing in 2015 was Exane BNP Paribas, which ranked 4th as a pan-European brokerage firm – moving up from 7th place in 2014. Deutsche Bank, the 5th ranked broker in 2015 improved from its 6th place finish last year. Rounding out the top ten pan-European brokers were J.P. Morgan (6th), Citibank (7th), HSBC (8th), Credit Suisse (9th), and Societe Generale (10th).
Independent research firms fared well in the 2015 Extel survey. Redburn Partners ranked in 16th position overall in 2015 from 17th the previous year. Absolute Strategy Research and Autonomous Research ranked in 24th and 25th, respectively in the 2015 Extel survey.
| Rank | Previous | Top Ranked Independents in 2015 WeConvene Extel Survey | |
| 1 | 1 | Absolute Strategy Research | |
| 2 | 2 | International Strategy & Investment (ISI) | |
| 3 | 3 | BCA Research | |
| 4 | 4 | New Street Research | |
| 5 | 5 | Lombard Street Research | |
| 6 | (-) | The Lazarus Partnership | |
| 7 | 9 | MRB – The Macro Research Board | |
| 8 | (-) | AlphaValue | |
| 9 | 6 | Empirical Research Partners | |
| 10 | 13 | 13D Research | |
| 11 | (-) | ResearchGreece | |
| 12 | 10 | Gerson Lehrman Group (TGR) | |
| 13 | 8 | Capital Economics Limited | |
| 14 | 12 | Longview Economics | |
| 15 | 16 | Les Cahiers Verts de L’Economie | |
| 16 | 14 | Messels | |
| 17 | 26 | Eurasia Group | |
| 18 | 24 | Stockcube Research | |
| 19 | (-) | Cornerstone Macro | |
| 20 | 17 | INTEGRAS |
In the independent research category, Absolute Strategy Research topped the ranking in 2015, with ISI (now Evercore ISI) and BCA Research finishing close behind in 2nd and 3rd respectively. One very interesting fact about Extel’s 2015 survey results is that fourteen (14) of the top 25 ranked independent research firms were not ranked at all in 2014. This could reflect increased buy-side interest in independent research given recent regulatory discussions.
Integrity’s Take
The annual release of Extel’s survey results are typically an opportunity for the ranked brokers and independent research firms to put out press releases touting their accomplishments. However, we cannot help but wonder whether results such as these spell bad news for many brokers — particularly if European regulators get their way and research payments are unbundled from execution services.
The big question is what European buy-side firms will pay for duplicate sell-side research coverage from lower ranked investment banks –particularly if they are forced to establish and manage relatively static research budgets? Clearly, the research franchises of the top investment banks are probably pretty safe. However, will the buy-side feel it is worth it if they have to ask their clients to fund the purchase of research coverage provided by lower ranked banks? This is the $64,000 question.