For decades, the buy side relied heavily on the sell side for a variety of value-add services like corporate access. However, as a result of recent regulatory shifts and a greater emphasis on technology adoption among asset managers, this trend is evolving.
In a recent Wall Street Journal article, Liz Hoffman and Geoffrey Rogow detailed the series of private conferences that major investment firms are organizing with corporates. It isn’t a secret, though, as the buy side has been originating events and hiring their own corporate access teams for quite some time.
While the buy side is grabbing more control of the process, as I mentioned in my previous blog, they still place tremendous value on the service that the sell side provides in research and advice, alongside the meetings they host. Technology is at the center of this collaboration, enabling the sell side to direct their distribution of events and research to buy-side firms who value those services.
In the past, the majority of buy-side firms were very “broker-friendly” and relied almost entirely upon the sell side to originate and advise during the corporate access process. In fact, until the implementation of MiFID II in January 2018, very few buy-side firms employed their own corporate access teams.
Prior to MiFID II, buy-side firms were able to pay for research and ideas that they were receiving from their banking counterparts from the expenses of the fund. However, the European regulation’s new unbundling rules have compelled the buy side to assume these responsibilities and pay from P&L. This shift is driving dramatic changes on the consumption of research services and corporate access.
Transparency and evidence to support the value of interactions is further driving a need for change.
With the advent of a robust, flexible event management system such as Tier1’s Ace Investment Calendar (AIC), managing corporate access events is far more feasible for buy-side firms. Through the use of AIC, for example, buy-side firms have direct control over every interaction, ensuring prime opportunities aren’t missed. It also encourages collaboration on events and meetings across market constituents, which can either be from one buy side to another, or from the buy side with the sell side or corporate.
Tier1 has positioned itself at the center of the marketplace through its flexible, interoperable and cloud-based solution that allows for in-house and third-party integrations, all the while being adaptable and modular to meet client requirements. Enabling clients to plug in their own algorithms to their portfolio management systems and other existing systems via AIC allows corporate access to be streamlined and far more manageable for the buy side.
These resources will be critical as the buy side continues to assume more responsibility under these ongoing structural and regulatory changes.