By Cath Rawcliffe,  Vice President Sales & Marketing, Singletrack

MiFID ll is creating a highly competitive ‘unbundled’ research marketplace where concepts of customer service and relevance are redefined, and the need to align content and services with client requirements is paramount.

Sell side firms need to keep abreast of clients’ interests and provide appropriate, timely content, while asset managers must be much more discriminating about the research products and services they select. Whether investment firms establish Research Payment Accounts or cover the cost of research through their own P & L,  the price and value of content and corporate access services will be subject to intense scrutiny. This is a market where sell-side firms have to capitalise on their strengths, reinforce their relationships and deliver clearly differentiated products and services.

Manage subscriptions

MiFID ll requires tight control of the provision of research and corporate access services to ensure that nothing substantive is provided without a corresponding payment, unless a pre-agreed trial is in place. This calls for fine-grained preference and entitlement methodologies which enable clients to be set up with subscriptions with entitlements appropriate for their tier of service and also aligned with their preferences as individual portfolio managers or buy side analysts.

Deliver via all channels

The role of research aggregators is growing under MiFID ll, driving the requirement for high performance centralised research distribution that can use aggregator-specific tagging, add or switch off specific aggregators for certain distributions and update or withdraw documents from aggregators. Asset managers are also opting to manage their own interests via interactive portals provided by their research providers. These are high value online relationship building tools that support easy access to relevant content, and provide real-time client interaction & preference intelligence.

Maintain the connections for buy-side compliance

The number of third party aggregators that enable sell-side firms to upload their interaction and consumption data is growing. This requires that client activity and client action information be automatically uploaded to supported aggregators and/or buy-side institutions directly in the appropriate file formats. This should be done automatically on a periodic basis for each of the client’s aggregator services.

Track & monetise

Research revenues can be maximised by recording and reporting research and service consumption at a very granular level - tracking all aspects of relevant buy-side interaction and service provision, whether it’s email or phone communications, meetings, roadshows, research distribution, or consumption monitoring across multiple channels. And for maximum transparency comprehensive records of client interactions should be consolidated in one place in a readily searchable format, with the facilities to track, quantify, analyse and report on the services provided. Keeping track of the sectors you’ve published content on and what clients have been reading provides some very useful insights. For example if a client is interested in reading research in that sector, but you are not meeting them, this could be a missed opportunity.

Analyse everything

The client interaction and consumption data collected for MiFID ll  holds potentially high value business intelligence. Analysing different activities can provide clear indicators of client preferences and client profitability, while demonstrating tangible value to clients. Some banks and brokers are already putting all the key components of client relationships, interactions and metrics into models which can be run from their CRM. Profitability analyses can show activities from quarter to quarter, driven by weightings - high touch to low touch - applied to different activity types. This provides a clear picture of changes in revenue versus activity and hence an excellent indication of performance.

Profitable contacts, substantive content

This analysis can also reveal key individuals in each client institution, so that Sales and Research can see which individuals should be serviced as a priority, which analysts are mapped to them and which of those analysts had high touch activity in the period in question and which didn’t. Furthermore, firms have to be providing the right parties with substantive research in order to be rewarded under MiFID ll, so frequent analysis can reveal gaps in the high touch activity that ultimately attracts votes and generates revenue.

Inform pricing

The insights that can be derived from interaction data can also help define pricing, which becomes crucial as much of the buy-side moves from retrospective compensation of research providers to agreeing budgets in advance. With the right processes and metrics in place banks and brokers have a far better understanding of their relationships with individual accounts, how each account compares, how well your firm has serviced them and, vitally, how they should compensate you.

About the author

Cath Rawcliffe, Vice President Sales & Marketing at Singletrack, has worked in the capital markets industry for many years and was formerly VP Sales and Marketing at SimCorp, a leading provider of investment management solutions and services.

Singletrack’s MiFID ll-ready CRM, client engagement and research monetisation systems are used by leading institutional brokers, investment banks and Independent Research Providers on four continents.