Financial Standard Comments - Research houses to step up transparency There have been calls for more transparency and accountability in response to ASIC's consultation paper on the regulation of research report providers and research houses. https://www.financialstandard.com.au/feed/latest?story=12898988 Mon, 14 May 2012 13:55:46 +1000 Mon, 14 May 2012 13:55:46 +1000 en-AU Copyright 2026 Financial Standard 5 Comment by Fund Manager () There needs to be some consideration in this debate for the unintended consequences with unwinding the the issuer paid research. Whilst no doubt it would be cleaner for everyone if we operated in a model where the issuer didnt pay for a research the problem for all models is that exclude real life practicalities and implications.
As a fund manager who deals with both sides of the research house models, it is my expereince that typically the research house models that do not charge for ratings have a higher turnover of analysts, get through less sector reviews, are generalists rather than specialists in each asset class and end up charging managers through conferences or the supply of data - which remains un disclosed to the end user.
It needs to be noted that in the issuer pays scenario commercial discussions are always seperated from the analyst doing the research. Whilst this isnt perfect - at least it is disclosed to the end user!
If at the end of the day, the end user of the research is after good quality and regular research from their provider with lower analyst turnover who are specialist in their fields, then removing the issuer pays model may not be the most appropriate model for research providers to operate within!

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]]> Fund Manager () Mon, 14 May 2012 13:55:46 +1000 Comment by ex analyst () I agree that the pay for ratings model is fundamentally flawed. It must change for quality research to come to the fore again. I wonder, however, who is willing to pay the price for good research? Dealer groups usually don't want to pay - they don't value it. And rightly so, most product is generally fine. You need a research house to tell you what NOT to do. The pay-to-play model doesn't deliver that.
Any analyst knows that an anything-under-5-stars report is virtually always met with howls of derision by the manager involved and often accompanies negative feedback delivered to both the research house and planners. What would public right of reply do? Another way for fund managers to exercise their over-developed marketing departments? It's certainly not a way to stimulate intelligent and thoughtful debate. BDMs are paid on sales - who cares about quality?

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]]> ex analyst () Mon, 14 May 2012 14:10:14 +1000