Credit Suisse Will Offer Free Bond Research Post-MiFIDBy and
Bank says free research will be classed as a minor benefit
Swiss bank joins Danske Bank in giving away most bond research
Credit Suisse Group AG is considering a market-beating price for basic fixed-income research after the introduction of new European regulations next year: zero.
The Swiss bank will give most research to institutional credit investors for free, according to three people with knowledge of the plans. Analysis will be made broadly available to comply with the European Union’s MiFID II regulations, which ban some free perks for clients, the people said, asking not to be identified because the information is private. Investors will be charged for equity research or private conversations with analysts, they said.
A spokesman for Credit Suisse declined to comment.
The revision of the Markets in Financial Instruments Directive, effective from Jan. 3, forces banks to charge for research that for decades has been bundled with other services such as trading. Competition for asset manager clients between research units at investment banks is causing prices to fall and Deutsche Bank AG has already halved the asking price of its fixed-income and macro research to 30,000 euros ($36,000) a year for up to 10 users. Danske Bank A/S is also planning to give almost all its research away for free.
The new rules are designed to stop investment firms receiving research and other services like meetings with company executives because it is a possible inducement to trade. By making research reports public, Credit Suisse says regulators will authorize its analysis as a “minor non-monetary benefit” to clients, exempting them from the rules, according to a June presentation sent to investors by the bank and seen by Bloomberg.
The presentation cites published comments by Europe’s securities regulator in April saying fixed income research would qualify if it’s “available to all investment firms or the general public.”
“It won’t be possible to make this pay and there’ll be more banks asking for very little or no money at all,” said Markus Ratzinger, a fixed-income investor at Anthilia Capital Partners. By contrast, equity-fund managers are more willing to pay because “they are one layer closer to company risk, so they are more interested in conference calls, meeting CEOs,” he said.
At Danish lender Danske Bank, only special client requests for extra research will be subject to fees, according to Jakob Groot, the bank’s global head of fixed income, currencies and commodities.
— With assistance by Jan-Henrik Foerster, and Frances Schwartzkopff