Even if 90 of our coverage will remain the same

This is the end of a financial windfall, who may sign the judgment of death of some analysis "shops" in the United States. The aid of large American banks for the benefit of independent research ends this summer for the vast majority of the institutions.

The "global agreement" - said agreement Spitzer - between the SEC, American fellow constable, and twelve banks (1) in 2003 provided for the payment of half a billion dollars over five years to fund independent research. Each was to buy the search for at least three firms of independent research, with an availability of notes to their customers.

The resolution of this litigation, set up under a record fine of 1.4 billion sanctioning conflict of interest between departments of analysis and activities of commercial banks, contributed to the outbreak and the support of many "shops".

Integrity Research data, a specialized us firm American research, more than 60 companies have been created in 2003. Small firms have benefited this money, but the most important companies as Standard & Poor's as "one of the largest recipients", according to Stephen Biggar, responsible for research, which did not specify the amount. This had led the group to expand the number of covered 1,300 to 1.550 values.

Difficult to exactly quantify the impact that will have the judgment of this "infusion" on independent analysis offices. A significant windfall, since, according to the evaluation of S & P, 60 to 70 search firms shares received each year, in total, between 80 and 90 million, at the top of the agreement. "We believe at 150 the number of independent research that has benefited from the aid, on approximately 800 we cover", supports Thomas Hutchinson, of Integrity Research.

Heavy consequences

The consequences of the end of the period will depend on many of the attitude of the banks. Some, with many individual investors, will continue to provide other analysts notes to their clients as Banc of America Securities, which has recently incorporated the Merrill Lynch research teams. Same sound Bell at Morgan Stanley, which, despite a low use of the search for third-party independent, will continue to provide it. However, Goldman Sachs and UBS, for example, have indicated that they intended more to propose notes of independent research firms, reported the Wall Street Journal last month.

The viability of independent offices differs according to their sector of activity and their degree of specialization. Some small, who, among their clients of hedge funds - which suffered during the crisis - could be more severely affected. "The end of aid to couple to a decrease in volumes of brokerage and commissions." Should see more mergers. Most should survive but by dismissing: many of them lose about 40 of their income, resumes Thomas Hutchinson. However, there is always a place for independent research. The analysis represents a cost important brokers and banks, which did not necessarily want to develop it in times of crisis.

Glimmer of optimism, many companies seem to have, according to professionals, much anticipated the end of this Manna, seeking to embark on new segments or to expand on other activities. Morningstar has communicated on a monitoring service summary of all the values of the Nasdaq, which costs will be supported by Nasdaq OMX. S & P, indicating have relays for growth on the ETF research for example, expects a loss of income, "but the impact will be limited," resumes Stephen Biggar. However, the main change could be felt in the coverage of the companies. "We are going to abandon the monitoring of certain values, little exchanged, that banks were asking us until then." Even if 90 of our coverage will remain the same.