Time to reconsider independent research

The FCA appears set to further the legitimacy of European Independent Research Providers (IRPs) by going for a clear cut definition of what independence means: genuine integrity stemming from research suppliers with NO exposure to transactions.

When finalised, this position will be in line with that of Euro IRP – the IRPs lobbying effort. Euro IRP promotes a clear distinction between commission-based financial research that fully falls under the MIFID guidelines and subscription- based IRPs with no interest whatsoever in transactions. This is what IRPs have always advocated: an alignment of interest between investors and analysts.

A very obvious and practical definition of independence is thus minted. It helps the whole industry, Buyside and Sellside alike, and is a timely move when investment processes themselves are expected to be ESG compliant, i.e. find the tools to defend the best interests of savers. IRPs are naturally aligned with that most essential obligation.

IRPs subscription-based offers will help protect price formation (no volume inducement) and help avoid conflicts of interest since they have only one client, the buyside community. Other regulators will hopefully agree with the FCA’s opinion, thereby forming part of the reshaping of MIFID2, something which is long overdue.

Ten years down the road of independent research, Alphavalue is pleased to be the only pan-European big cap research provider facing the non-independent bulge brackets, i.e. having a genuinely-independent view on c. 450 large caps.

AlphaValue has striven to build open and direct relationships with major issuers while maintaining our independence (no business with corporates). Year after year, AlphaValue analysts have succeeded in engaging in constructive discussions with most corporates while not yielding on principles.

AlphaValue also reckons to be a forerunner in unconflicted ESG/sustainability research, completely plugged into its equity and credit research with live ESG impacting of its target prices. This can only be achieved with the hard work of its 31 analysts, proprietary financial and non-financial data that helps defend its independence and a fully proprietary technology that turns its website into a unique ‘meta-research’ tool.

The regulatory changes also mean that, as with its independent peers, AlphaValue can be trialled at any time with no constraints.