Morningstar expands paid-for research

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New York – NASDAQ OMX announced this week that it is expanding its deal with Morningstar to provide paid-for research coverage to listed companies. The partnership between NASDAQ and Morningstar was originally announced in June 2009; in the third quarter of 2009, Morningstar began producing free profiles of all NASDAQ listed and Nordic listed companies.

Now, NASDAQ OMX companies can contract with the exchange to get full analyst research coverage by Morningstar, including a comprehensive first report and at least three quarterly updates.

Morningstar was one of the companies that benefited significantly from the Global Research Analyst Settlement. With the settlement ending in 2009, the firm has been trying to locate new revenue opportunities for its equity research product. This is the first time that Morningstar has done research paid for the issuer. Bruce Aust, executive VP of NASDAQ OMX, emphasized that the transaction between Morningstar and the issuer would be an arms-length one, with NASDAQ acting as the intermediary. Morningstar is one of several independent research networks that have turned to the paid-for model in recent months. Several other exchanges, including the LSE, AIM, Singapore Exchange, and Bursa Malaysia, have also begun subsidizing independent research for listed companies.

NASDAQ’s previous venture into issuer-sponsored research, the Independent Research Network launched in collaboration with Reuters in 2005, folded in 2007 due to a poor adoption rate and failure to price the product competitively. Eleven companies have already signed up for the NASDAQ-mediated Morningstar coverage, and the two firms have negotiated an exclusive deal which prevents NASDAQ from working with other research providers.

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