As we've noted before, you probably don't want to work in research now. McKinsey & Co is predicting massive layoffs in equity research in the next few years, partly because of MiFID II and partly because equity sales and trading jobs have already been cut and research jobs haven't. Researchers are already complaining of being asked to work for free.
In this context, yesterday's news that Deutsche Bank will be halving the amount it charges for its research after MiFID II doesn't look very promising. Bloomberg reports that Deutsche's plan to charge €60k for 10 users to access its fixed income and macro research has been revised downwards after unnamed other banks cut their prices. Instead of €60k, Deutsche will be charging €30k. That includes access to written research and access to Deutsche's analysts. Basically, Deutsche's analysts are going to pimping their wares, and themselves, for a lot less money than they'd thought.
Maybe it's just Deutsche? The good news for the moment is that most other banks seem to be sticking to higher research prices. Bank of America reportedly plans to charge $100k (€85k) per client for an "ultra high service." Nomura proposes to charge €120k for access to all its research on global economics, fixed income, credit and foreign exchange. Meanwhile, fund managers like Unigestion and Pimco have indicated that they will absorb the cost of banks' research themselves rather than passing it on as a separate cost to their clients, suggesting they might be willing to pay more to banks.
Either way, life for researchers is about to change. In future, the way researchers work is likely to be as much the result of their employer's pricing structure as the depth of their research notes and rankings on Extel. The danger is that prices will race to the bottom. In the worst banks, researchers will be reduced to commodities, endlessly churning out research notes and meeting clients for little real gain. In the best, they'll become revenue generators in their own right. The question now is which banks will fall into the first category and which - if any - will fall into the second.
Separately, Credit Suisse has made another big hire for its equities business. Reuters reports that Michael Ebert from Bank of America has joined as global head of equity derivatives. Credit Suisse has been rebuilding its equities business this year after hiring Mike Stewart from UBS as the new global head. Stewart worked for Bank of America before joining UBS in 2011 and is therefore likely to know Ebert from the past.
CDOs are making a comeback under the guise of "bespoke tranches." The market has more than doubled this year compared to last, with issuance of $20-30bn. (Financial Times)
High ranking German regulator says banks need to move to Frankfurt soon. “The banks have to finally get their act together, otherwise they won’t make it before Brexit happens at the end of March 2019.” (Handelsblatt)
Shares in Bitcoin firm suspended after rising 6,000%. (Marketwatch)
Overseas students don't want to stay in the UK after all. (Guardian)
My year at Google Brain. (ColinRaffel)
Death of the coding bootcamp. (NY Times)
Maybe you could live in an empty London office building. (Vice)
The personality style best adapted to the situation of interacting at work within a cohesive group of colleagues is a talkative, true-to-one’s-self forthrightness. This is likely to maintain trust. (HR Director)