New York—The highest-ranked sell side services in the broker vote process are corporate access (non-deal direct meetings and one-on-one conferences) and thematic ideas, according to a recent survey conducted by Thomson Extel.
Sell side firms offer a variety of equity research services: the core services represent written reports, alerts, and other research which is disseminated to a broad set of clients, access to analysts which is typically restricted to larger clients, corporate access which tends to be provided to larger clients, sales support, and access to models. Expert networks, such as Goldman’s Vantage Marketplace or Bear Stearns’ Primary Insight and bespoke research, such as Morgan Stanley’s AlphawiseSM, are distinct services which are not packaged with the classic equity research services.
Thomson Extel surveyed 50 asset management firms in different regions on how they value research and their broker vote process. 54% of respondents were from the U.S., 22% from continental Europe,20% from the UK, and 4% from Canada.
Survey respondents indicated that they intend to increase use of “quality independent research” while decreasing the number of sell side research firms used. 44% of respondents use between 50 and 200 research providers. Survey respondents expect to increase their use of non-U.S. sources of research, as more assets shift from the U.S. markets.
The survey cites the role of ‘director of corporate access’ as growing among buy-side, defined as someone who manages their relationship with the sell side to get corporate access ranging from a meeting with an industry expert to a field trip to a road trip to a conference.
“The internal research departments on the buy-side have gotten so huge. They have to get a handle on what they’re using internally versus externally,” according to Diana Blaney, Thomson Extel Surveys’ North American director.
Thomson offers its own broker vote system, competing with Cogent, EzeCastle, Financial Sockets (now part of State Street) and Rontech. The survey suggests that the broker vote process is more developed in Europe, where commission transparency is being mandated by regulators. Overall, broker voting systems are still in their infancy, with the majority of respondents using excel worksheets to administer their votes and having implemented broker voting processes recently.
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