FactSet’s new TW(i)ST


New York – Earlier this week, FactSet Research systems announced an agreement to allow sell-side clients of The Wall Street Transcript (TWST) to deliver their corporate access and analyst meeting activity data to their buy side clients through the FactSet platform.

The TWST data will help to bolster FactSet’s existing event and research management tools.  TWST’s MeetMax CAM (Corporate Access Manager) is a tool that allows buy-side investors to have a complete record of their corporate access services.  The tool allows the creation of any kind of event or meeting, as well as the importation of meetings from other systems.  When partnered with FactSet, users will now be able to add notes to meetings, score the meetings, and analyze the data from the meetings they attend.  The hope is that all of this together will allow the buy-side to properly compensate the sell-side for the contributions they actually bring to the table.

The partnership could signal FactSet’s belief (and possibly the belief of their clients) that buy-side firms would like to get serious about tracking the corporate access the sell-side is providing them.  TWST notes on their website that there are two trends currently which make this a likely possibility.  The first trend TWST points out is that after a “few years of Wellington and SAC being the only guys driving the bus – there are now a sizeable number of buyside firms tracking what meetings they take so their traders can better figure out who to pay.”  The second trend is that the tools to track corporate access are getting cheaper and simpler to use.  The partnership between FactSet and TWST is another example of the second trend in action.

The benefit to both the sell-side and the buy-side of better tracking the contributions the sell-side makes to the investment process is obvious.  Hopefully the transparency which TWST’s data brings to the marketplace will help to make the buy-side more aware of exactly what services they are compensating the sell-side for, as well as help the sell-side to be properly compensated for the value they actually bring.  What is interesting about this particular deal is that by integrating TWST with FactSet, the event data is alongside all of the buy-sides other analytical tools. Traditionally, broker review/event tracking tools have been more focused around the vote.  It will be interesting to see if the more integrated approach leads to a more organized payment structure in the long run.

One possibly hurdle to the sell-side benefiting from an increased awareness of corporate access services is Integrity’s finding from the upcoming Small-Cap ResearchFocus report which shows that buy-side investors may not value corporate access as highly as some may expect.  On a range of factors, access to company management was ranked in the middle on the importance the buy-side placed on it (8th overall out of 15 factors such as timeliness of ideas, cost/value for money, custom research capabilities, etc.).  The finding relates to those investors who invest in at least some small-cap securities but respondents were not limited to those who exclusively invest in small-cap.  The apparent falling in value investors place on corporate access is interesting in that it could signal that the lack of payment sell-side firms have traditionally seen from their efforts in corporate access could stem from a lack of perceived value rather than from a lack of awareness of the service.  Perhaps the new integrated approach which FactSet and TWST offer will help to clarify the question of why the sell-side does not feel it is being properly compensated.


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