Instinet Europe is the latest to cash in on revelations of conflicts of interest in traditional equity research. The company has launched an independent equity research business called the Independent Research Consultancy (IRC).
The objective of the consultancy is to give institutional investors and hedge funds access to what Instinet calls “a differentiated research offering.” Having assessed a client’s research requirements from an initial consultation, Instinet aims to deliver a tailored list of independent research providers suited to the client’s requirements and complementary to the research they might already receive. Each provider would have a unique and independent offering, covering a range of countries and sectors or specialising in a specific analytical technique. Instinet believes that this consultative approach is credible, because the number of independent research providers is continually expanding. “Meeting each provider and assessing their relevance and quality would involve a significant amount of resource by clients,” it says. “The IRC is designed to save clients a considerable amount of time and effort.”
The IRC offers a variety of payment options to best fit the requirements of Instinet’s clients. BrokerShare, Instinet’s new commission-sharing arrangement, enables clients to trade with Instinet and direct commissions to independent research providers. It is designed to give clients control and transparency when directing commissions to ensure they can receive the research they value.
“Instinet has a strong track record of providing products and services which help improve clients’ investment processes and performance,” says Daniela Meyers, Head of Independent Research, Instinet Europe. “The launch of the IRC reflects our commitment to help institutional investors and hedge funds respond to an evolving regulatory and business environment.”
Julien Hammerson, Head of Equities, Instinet Europe, added: “There is a clear demand for independent research as an alternative or complement to the sell-side brokerage research they currently receive. As European regulators increase their scrutiny of conflicts of interest, our clients are anticipating potential regulatory changes by investigating independent research and we are seeing a growth in this area right across Europe. We are confident that this service will add significant value to our clients.”