Institutional Investors Pay for Research in Cash

A number of large institutional investors are asking their brokerage houses to strip out the cost of research from trading commissions, Dow Jones reports. They are apparently following the lead of Fidelity Investments, which struck deals with Lehman Brothers and Deutsche Bank late last year to separate the cost of trading from research.

Since then, Lehman and Morgan Stanley have indicated that other investors are looking to unbundled research from trading fees, and a trend appears to be developing.

"I have observed pockets of unbundling activity where people are choosing to pay be check for some research, so there's certainly more to unbundling than simply the Fidelity/Lehman story," commented Ian Domowitz, CEO of brokerage firm ITG Solutions Network.

Across the pond, the U.K. regulator is now requiring brokerage firms to break out the cost of trading and research separately, and some analysts expect the trend to continue around the world.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.