JPMorgan Issues Stark Warning to Wall Streeters
JPMorgan Issues Stark Warning to Wall Streeters

JPMorgan Issues Stark Warning to Wall Streeters

JPMorgan Issues Stark Warning to Wall Streeters

Wall Street stock analysts are about to find themselves on the chopping block, and only the best will survive. That was the hard truth Mary Erdoes had for a room full of analysts Thursday at the BancAnalysts Association of Boston Conference.
Erdoes, the head of JPMorgan Chase’s $1.9 trillion asset and wealth management business, was asked about impacts from MiFID II—Europe’s sweeping financial regulatory changes that will be implemented in 2018—and painted a future in which asset managers chop their budgets and only pay for research from top-tier analysts, Yahoo Finance reported.
“On the buy side, the larger firms will absorb the costs and figure out how that cascades its way through,” Erdoes said. “It probably means they’ll tighten up a lot on what they spend on sell-side research, which is why the two go hand in hand.”
Firms are planning to make cuts because MiFID II requires asset managers pay for research separately from commissions for trading execution, whereas it previously often came bundled with other products.
Most of the largest asset managers, including JPMorgan, are absorbing the multi-million dollar costs and funding the research internally, rather than passing the costs on to their customers. “I only want the five best of you.”
This is bad news for stock analysts, as it could result in a 50% “compression” in research budgets, according to Credit Suisse. That means less money to go around.
Erdoes plainly laid out what happens next: “I was dealing with 10 of you; I don’t want 10 of you anymore, I only want the five best of you.” She noted that the sell-side research industry had already contracted massively in recent years, with investment banks spending “50% of what they used to spend.”
“So you’re the precious few. The rest of them are not here. Maybe this room was five-times bigger before, I don’t know,” Erdoes told the audience of analysts, many of whom would presumably not be there the following year given the looming cuts.


Short URL : https://goo.gl/H6ANEU
  1. https://goo.gl/YA3JhS
  • https://goo.gl/jjZmsP
  • https://goo.gl/2jXYrK
  • https://goo.gl/8DkkDK
  • https://goo.gl/AsVa1a

You can also read ...

Venezuela Wants to Improve Economy
Venezuelan Labor Minister Eduardo Pinate says the Bolivarian...
New Whistleblower Rises Against India’s ICICI Bank
India’s private lender ICICI Bank has been identified as a...
GDP expanded 6.8% year-on-year in the Q1.
With growth resilient and progress made in the pursuit of high...
Closing Africa’s Wealth Gap
From “Africa Reeling” to “Africa Rising”, there’s a new...
Asian countries form a crucial part of the supply chain for many of the Chinese electronics the US has slapped with tariffs.
The mounting trade tensions between the US and much of the...
The accumulated improvement in the structural balance since 2015 amounted to 0.7% of GDP.
The European Council closed the excessive deficit procedure...
Italy’s New Gov’t Facing Daunting Challenges
Italy’s Five Star Movement and the Lega party managed to form...
Bitcoin Falls to Four-Month Low
Bitcoin dropped to a more than four-month low on Friday,...

Add new comment

Read our comment policy before posting your viewpoints