Forefront Communications

Intelligent Trading Technology: MiFID II Drives Innovation in Research Management

Mark Dowd

Mark Dowd

The challenges of how to manage research under MiFID II – where it comes from, how you pay for it and how much it costs – are the result of the regulation’s focus on bringing transparency to investors. The regulation has also created a cottage industry of nimble innovators alongside the big players that have created solutions aimed at addressing the challenges.

Many of the innovators offer aggregated research platforms that assign a specific value to each product, making their services MiFID II compliant while still enabling fast and effective distribution. But there is a new breed of provider springing up that is looking to take things a step further.

Visible Alpha

Visible Alpha, for example, a US-based investment research technology firm founded in 2012, offers a suite of buy-side and sell-side solutions that are transforming the way research services such as reports, analyst models and corporate access events are distributed, consumed and evaluated.

“Equally as important as helping the buy side find and consume research – we’re providing them with the tools to accurately value it,” explained CEO Scott Rosen. “What reports did they purchase, who read them, what analysts did they speak to, how often and for how long? Clients can then assign proprietary scores or grades to each. It covers the entire research spectrum, and it helps the buy-side to monitor and measure, both quantitatively and qualitatively, all of their sell-side interactions.”

Beyond this, in early 2017 the company introduced a new level of transparency in investment research with the launch of Visible Alpha Insights. Insights, aggregates analyst spreadsheet models from major banks to provide deep comparable and consensus views across hundreds of line items, such as unit sales, pricing and margins for individual products and key financial, divisional and operational metrics for each company.

“The value of a 30-page research report is in decline,” said Rosen. “In its place, these aggregated consensus numbers are distilling the intelligence behind the reports in a consumable way, providing a level of detail and insight that is unavailable anywhere else.”

In the past, analysts would have been far more reluctant to share their proprietary data models – but in this increasingly competitive climate and with so much information out there, the pressure is on for them to prove that their forecasts are robust – enabling firms like Visible Alpha to leverage this new trend for transparency in order to create a brand new method of processing and presenting research data.

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