JPMorgan Plans to Charge $10,000 for Entry-Level Equity ResearchBy and
Pricing lowest to emerge as bank seeks to compete post-MiFID
EU ban on free research for clients forces industry overhaul
JPMorgan Chase & Co. is proposing to charge as little as $10,000 a year for equity research, the lowest price to emerge so far, as the Wall Street giant seeks to grab market share when a European ban on free analysis for clients is imposed, two people with knowledge of the matter said.
For that fee, customers will have read-only access to JPMorgan’s online analyst portal, known as Morgan Markets, which houses all of its analysts’ stock reports, said the people, who asked not to be identified speaking about confidential pricing information. Speaking directly to analysts and attending conferences will cost more on a client-by-client basis, and commissioning analysts for specific research even more than that, one of the people said.
By comparison, rival Barclays Plc was planning to charge 30,000 pounds ($39,000) for read-only access to its European research, and as much as 350,000 pounds for its “gold” package that includes field trips and corporate visits, according to a pricing document reported by Bloomberg News last month.
A JPMorgan spokesman in London declined to comment.
Only five months remain for the decades-old practice of sending analyst reports to clients at no charge as a courtesy and marketing strategy. The European Union’s Markets in Financial Instruments Directive II regulations, enforced from Jan. 3, require money managers to separate the trading commissions they pay from investment-research fees. This means banks in turn have to be more transparent, providing specific charges for their analysts’ time and work in order to comply.
JPMorgan, the world’s largest investment bank, is pursuing a strategy to grab market share from rivals with smaller research operations that will be forced to retrench as spending on research by hedge funds and asset managers plunges, one of the people said. Pricing at the lowest end of the spectrum runs the risk of attracting the attention of regulators by charging so little, analysts have said.
The U.S. bank has also floated $50,000 for a basic fixed-income research option, with prices increasing for more tailored packages and better access to analysts, Bloomberg News reported in April. One senior manager at one of the largest European asset managers said at the time that JPMorgan’s move to price at the cheaper end of the scale was an attempt to win market share.
Separately, JPMorgan Asset Management said Friday that it will pay for external analyst research itself for clients affected after MiFID II is introduced, rather than pass on the extra cost.
The unit, which oversees $1.9 trillion in assets, has not made any changes to its in-house research teams as a result of the policy change, according to the statement. The decision follows Vanguard Group, the world’s second-largest money manager, which earlier this week said that it will pay for research out of its own pocket rather than charging investors in its European funds.
— With assistance by Sarah Jones