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 ...

Close to 40% of digital transformation initiatives will be supported by AI capabilities.
The digital economy in Asia-Pacific, or APAC, is expected to...
An electronic stock indicator of a securities firm in Tokyo.
As investors come to terms with the impending end of easy...
Maersk is expanding its competitive universe to include different types of companies.
The world’s largest container company will start looking for...
Most economists would agree that Italy needs faster economic growth if it is to resolve its public debt  and banking-sector problems in an orderly manner.
Italy’s economy is growing again, but it’s still the worst...
Lloyds Profits Miss Forecasts
Lloyds Banking Group PLC raised its 2017 dividend by 20% and...
NZ Says Pacific Trade Deal Will Boost GDP
New Zealand estimates a Pacific trade deal would boost its...
CBs May Top Inflation Targets
Not only will central banks meet their inflation targets, they...
More Scots Jobless
Scotland’s unemployment rate rose to 4.5% in the final three...

Add new comment

Read our comment policy before posting your viewpoints