Substantive Research recently published findings from a survey of the 50 largest asset managers globally showing US investment research budgets have recovered 40 basis points since 2022, while European budgets have recovered just 2 basis points over the same period. The survey covered firms managing a combined $20 trillion in AUM, split 35% North America, 25% EU, and 40% UK.
The Research Budget Divergence
The scale of the gap in US versus EU research budgets is striking. For asset managers above $150 billion in AUM, typical US buy-side firms now spend $8.6 million more annually on research than their European counterparts running comparable strategies. In some instances, US research budgets run five times higher than European equivalents at firms of similar size and investment mandate.
Globally, investment research budgets grew approximately 1% in 2025, but that growth was driven entirely by US firms. European budgets remain constrained by the MiFID II unbundling framework, which has required explicit pricing of research and corporate access since January 2018. Mike Carrodus, CEO of Substantive Research, explained: “The difference in research regulations has clearly prevented many UK and EU-based asset managers following suit. There’s always been a structural spread between American and European research budgets, but now it’s widening further as US firms respond to evolving needs from their investment functions.”
The consequences for European asset managers are increasingly visible. In a separate Substantive Research survey from November 2025, 73% of European asset managers confirmed they were at a competitive disadvantage relative to US counterparts in accessing research and corporate meetings.
Carrodus noted that the current market environment is making that tension acute: “The current volatile and uncertain investment climate is driving the need for greater access to differentiated research, and we are seeing consumption levels rise across the board. In America this can be accommodated, as the costs will come out of trading commissions. But in Europe it can mean that asset managers have to make tough choices later in the year regarding which research they can continue to access, particularly at the smaller end of the industry.”
Budget concentration remains high on both sides of the Atlantic. The top 10 research providers captured 55% of average global research budgets, with the top three alone accounting for 24%. Independent research providers have gained some ground, with average spend on IRPs growing 29% since 2022, but they still represent only 9% of total budgets.
The regulatory picture in the UK is shifting, though adoption remains tentative. The FCA released new COBS2 rules in July 2024 covering segregated mandates, making it easier for asset managers to charge research costs alongside trading commissions. PS25/4, released in May 2025, extended that flexibility to pooled funds, removing what practitioners had identified as the final structural barrier to Commission Sharing Agreement adoption. Carrodus described the anticipated transition: “A few small buy-side firms have already adopted CSAs in Europe, and when larger firms follow suit later this year, it is very likely that the vast majority of their peers join them in rapid succession.” The switchover is expected to begin in earnest in the second half of 2026.
On a separate front, the FCA is now proposing to repeal its 2018 IPO research reforms, including the seven-day publication delay requirement and the rule requiring banks to give independent analysts the same information as their own analysts. Jon Relleen, Director for Infrastructure and Exchanges at the FCA, stated: “Market feedback has been clear that these rules can introduce additional risk, cost and complexity without delivering the intended benefits. We are committed to reducing friction, supporting growth and ensuring the U.K. remains a competitive and trusted place for companies to raise capital.”
Whether CSA adoption among larger European managers accelerates quickly enough to close the $8.6 million per-firm spending gap with US peers will define the competitive trajectory of the European buy-side’s investment research capacity through the end of the decade.
About Substantive Research
Substantive Research is a UK-based provider of data, analytics, and market intelligence focused on the global investment research and market data ecosystems. The firm works primarily with asset managers, hedge funds, and research providers to bring greater transparency and efficiency to how investment research and market data is sourced, priced, and evaluated. Its platform enables clients to track research and market data consumption, benchmark pricing, and assess the value received from external investment research and market data providers.
Founded in 2015 in the wake of regulatory changes such as MiFID II, Substantive Research has positioned itself as a key partner for firms navigating unbundling requirements and increased scrutiny around research and market data spend. By combining proprietary data with industry insights, the company supports better procurement decisions and improved budget allocation. In addition, Substantive Research produces conferences, surveys, and thought leadership that offer valuable perspectives on trends shaping the research and alternative data landscape.
Our Take
For the buy-side, the Substantive Research survey results quantifies what many European portfolio managers already feel, that the MiFID II era has left them structurally underfunded on research relative to US competitors, and the gap is widening rather than closing. A 40-basis-point recovery for US firms versus a 2-basis-point European recovery since 2022 is not a rounding error. It is a compounding disadvantage for European asset managers in analyst access, coverage breadth, and corporate meeting frequency that will show up in portfolio outcomes over time.
The CSA pathway is real, but Carrodus is right to flag the collective action problem. For this to work, larger asset managers need to move together, and the second half of 2026 is now the de facto consensus target for that tipping point. The FCA’s willingness to repeal the 2018 IPO research rules adds to the sense that UK regulators have accepted that MiFID II’s research provisions produced costs without proportionate benefits. That admission matters as much for its signaling effect as for its practical impact.
The independent research provider numbers also deserve attention. A 29% increase in IRP spend since 2022 against only a 9% share of total budgets suggests the segment is growing from a very low base, with most of the upside still ahead. If CSA funding unlocks new budget capacity for European managers, IRPs stand to benefit disproportionately, since those incremental dollars are more likely to flow toward differentiated coverage than toward the top-three providers already capturing 24% of global spend.
This could well pressure Jefferies, JP Morgan, and UBS, the current top-three by research payments, to deepen their European offering and lock in relationships before CSA-funded budgets begin flowing to smaller and independent providers. Firms like Substantive Research, positioned to advise on that budgetary allocation, are well-placed to see that shift before it appears in published data.
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