Buy-side seek clarity on sell-side research pricing

FinTech experts agree the sell-side remain unsure of how to price research ahead of MiFID II’s unbundling rules.

FinTech specialists have expressed concerns over the sell-side’s ability to price research for the buy-side as the clock ticks down to MiFID II implementation.

One panellist – addressing a buy-side audience - described the sell-side as ‘too scared’ to price accurately, while another questioned their reluctance to seek help or consultation.

Scott Winship, co-founder of Alpha Exchange, told delegates The TRADE’s FinTech Innovation for the Buy-side event the sell-side are unsure what the buy-side want in terms of research.

“The sell-side haven’t worked out their own models and they haven’t worked out the pricing specifically - but that’s what they’re doing now. I think they’re too scared to price accurately and that’s why they’ve kept the bundle as wide possible,” he said. 

Vicky Sanders, co-founder of RSRCHXchange, added the pricing research is also a new concept to the sell-side.

“The sell-side have never done this before and I don’t think they have brought in new help or the right type of consultants in to advise on how to price content and how to get the best price for your biggest client,” she said.

Pricing research ahead of MiFID II’s unbundling rules has been a major cause for concern for the buy-side. A survey published in March this year revealed 60% of buy-siders are planning to wait until the deadline before implementing unbundling.

Jim Hiltner, director of sales at ONEaccess Visible Alpha, advised delegates to consider the responsibility as being with the buy-side.

“Some of the clarity from the sell-side could be a reverse engineered budget or target based on what you maybe paid last year. The onus right now is on the buy-side to analyse those businesses and see where they are getting value,” he said.

A further survey published in January this year suggested many buy-side firms are not entirely sure of their unbundling obligations.

Over a third of buy-side respondents also stated they are not confident of being ready for implementing the unbundling rules - due to come into effect on 3 January 2018.