New York – As we sit down for Thanksgiving dinner tomorrow, the research industry, like many others, will be wondering just what part and how much of the turkey they can expect. The first thing we might notice is that, despite a number of shocks and scares, the bird isn’t that much smaller than it was last year. This is encouraging since there have been a number of events that pointed towards perhaps serving squab instead of turkey.
After providing a new interpretive guidance on soft dollar transactions in the summer (yeah), Chris Cox wrote to Capitol Hill indicating he thought the soft dollar safe harbor should be abolished (Boo). It looked like the SEC was going to take the bird right off the table. With the exception of the paid-for and hard dollar only shops, there was not going to be much turkey to go around. After being rebuffed by Senator Schumer, though, this nervousness began to settle down.
Another factor affecting the markets this year has been the increased use of CSAs and CCAs to pay for external research. Of import, was the letter that Goldman received from the SEC indicating that they would not seek action if Goldman were to pay research firms that were not B/Ds through the us of CCAs. This opened the door for non-B/D research providers to dine at the commission table.
The sub-prime mortgage fallout has taken a good deal of joy out of the sell-side research table that had been already dinged by the Global Research Settlement. Even a few long only money managers got winged by the sub-prime fiasco. But it has not diminished the festivities at the hedge fund table. In fact, many research providers have been working the phones his year trying to wrangle an invitation to Hedge-Feast-2007.
So when we spend the obligatory time tomorrow thinking through all of the things to thankful for over the past year, most of them will be Houdini like escapes from near tragedy, rather than Brett Farve long bombs.
Note: we will not be posting a blog this Friday.