Curious what other sell-siders think is the best type of shop (boutique vs. bulge bracket), or specific place (JPM, Citi, ISI) to be at once MiFid rolls around. Is anyone actively trying to move around because of this? What cautionary statements are you guys hearing?
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I think both bulge brackets and top boutiques (i.e. basically just Bernstein and ISI) will be fine. They might not grow, but it definitely won't be the end of the industry, unlike what some people claim. It's probably the middle market shops and true boutiques that are really going to suffer from Mifid; right now, it's still really unclear where middle market and boutique ER really adds value, and that's simply unsustainable in an unbundled world.
Thanks, are you speaking from a buy-side perspective, sell-side perspective, or from general knowledge of the space?
We had a bigger client of ours leave who said under MiFid they couldn't support us given the lack of breadth in our firm's coverage. That might just be a one-off case and I don't expect job cuts at my firm, I'm just worried about salary progression (with my firm and the industry).
What about thoughts on American vs Euro banks in research post-Mifid? Also, I've heard a few more banks are rolling up some sectors to reduce the total headcount of analysts.
I spent a summer in a top 5 SS research BB and can add some light. A lot of discussion was based around MIFID2 this summer and after speaking to people, consensus is that overall this be very bad for research. Buy side funds will now see they are directly paying for research that they might not exactly read and are less willing pay for outside top 3 research. In general, BB research for the top 1-5 will not fundamentally change but teams could ultimately become more lean and specialized.
In regard to publish boutiques/lower BB's, they will continue to have research but will mostly exist for internal and focus a few specific industries for those who publish. However, I think long-term this will be a benefit for research, as people will spend less time publishing things none reads and that eventually there will be a higher demand for research when marks become more volatile again and central banks start are not interfering with markets (speaking more from a credit end but still).
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