Study: In With the Independents, Out With Broker Research

New Financial Services Authority rules in the U.K. on bundled brokerage and soft commission arrangements that went into effect Jan. 1 have prompted institutional investors to contemplate switching their source of research, according to a study by Greenwich Associates. Jay Bennett, a Greenwich consultant, says the study also reveals that British institutions are switching from getting their research from full-service brokers and turning to independent researches, and are anticipating cutting back on using full-service brokers for trade execution in favor of "low-touch or self-directed electronic trading." In addition, the survey found that more than half of senior investment professionals surveyed provide FSA "Level 1" disclosure – once a year, and describing manager's policies and procedures regarding management of costs paid on behalf of clients – while only 30% provide "Level 2" disclosure, provided twice a year with client-specific and firm-wide information on how commissions paid have been paid or generated.