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JPMorgan Says MiFID Revealing What Research Clients Really Want

JPMorgan Chase & Co.’s research analysts have a few more months to prove they’re worth paying for.

The bank is forecasting a drop in research consumption amid European regulatory changes that require firms to unbundle trading commissions from research, co-President Daniel Pinto said at a conference in New York sponsored by Deutsche Bank AG. While initial conversations show clients want to spend as much as 30 percent less than they did last year, the bank will wait several quarters before making any changes to that business, he said.

“The good thing about this is that it will be very clear to see what clients really value out of research and what they don’t value,” Pinto said. “The millions of pages that we write about many things, it may not be what clients are willing to pay for.”

So far, the bank has seen better attendance at conferences it hosts and a tougher time selling written research, Pinto said.

Read more: Pinto expects ‘flat’ trading in 2Q

The regulatory shift, known as MiFID II, upends the way banks support securities research and how clients pay for it. Pinto said he expects MiFID to push more trading to the top banks as asset managers look solely for the best price and execution on their orders.

"From a JPMorgan point of view, we think the net of the two will be more or less neutral," Pinto said. "We’ll increase execution and the consumption of research will reduce."

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