Independent investment research will suffer in the near term

The recent decline in commissions generated by buy-side equity trading will cut funding available for independent and sell-side investment research, according to “Integrity’s Outlook for Independent Research.” Michael Mayhew of Integrity Research Associates says that commissions are expected to fall by 40% next year.

However, there is a silver lining to this dark cloud. Integrity says, “However, once the dust settles (in late 2009 or early 2010) we anticipate that the market for investment research, and particularly non-traditional independent research, is likely to improve markedly.” Why? Because buy-side research staffs will have shrunk and the supply of good research will be tighter.

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