{ "docId": "019dd923-5ca1-7489-b637-4d61cc06babb", "docSlug": "7e4493784390622a", "documentTitle": "IBV Old Game New Rules FinMarkets", "authorId": "IBM", "authorName": "IBM", "documentKindSlug": "consulting-deck", "documentKindLabel": "Consulting deck", "sourceTypeSlug": "strategy_consulting", "sourceTypeLabel": "Strategy consulting", "presentationDate": null, "orientation": "portrait", "aspectRatio": 0.773, "pageNumber": 8, "pageCount": 15, "prevPage": 7, "nextPage": 9, "slideType": "key_messages", "function": "summarize", "density": "dense", "nDataPoints": 0, "notes": "The slide discusses the economic shift in financial services, specifically the move away from soft-dollar commissions and bundled research/trading services.", "elementsJson": [ "paragraph", "footnote" ], "metadataConfidence": 0.9, "imagePath": null, "slideHref": "/slides/019dd923-5ca1-7489-b637-4d61cc06babb/8", "deckHref": "/decks/019dd923-5ca1-7489-b637-4d61cc06babb", "deckJsonHref": "/decks/019dd923-5ca1-7489-b637-4d61cc06babb.json", "deckAnchorHref": "/decks/019dd923-5ca1-7489-b637-4d61cc06babb#slide-8", "components": [ { "bbox": null, "kind": "callout", "text": "To work through this challenge, sell-side companies will have to consider breaking out the costs of trading, advisory and research services.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd951-c23f-7114-a895-104537d78011", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.205, "w": 0.61, "x": 0.302, "y": 0.377 }, "kind": "paragraph", "text": "To work through this challenge, sell-side companies will have to consider breaking out the costs of trading, advisory and research services. This will involve changing the status of offerings – from bundled services to individual items priced according to the value they provide to the buy-side and the cost they incur on the sell-side. And if the perceived value doesn't match the cost to produce, some services will no longer be offered. Under these circumstances, sell-side firms must seek ways to enhance their offerings – moving from disseminating information to interpreting it (without any perceived bias) to add more collective benefits for the client and, ultimately, the company.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0cf2e3ec-5df5-48d2-a6d9-c026d58ef511", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.355, "w": 0.61, "x": 0.302, "y": 0.093 }, "kind": "paragraph", "text": "A number of studies confirm that bundled securities products come at a higher price than stand-alone transactions. Bundled offerings (often paid for by soft dollars) carry higher explicit costs (trading commissions) as well as greater implicit costs (in terms of market impact and opportunity). It's no wonder, then, that buy-side firms are increasingly attracted to the separation of advice and execution – the value provided by the research that they receive is outweighed by the cost, whether paid for by soft dollars or not. One only has to observe the amount of stand-alone transactions being performed by execution-only brokers and through ECNs to understand the significance of this trend. The demand for stand-alone research is underscored by a new crop of pure research firms and the tendency of large buy-side companies to rely on their own research capabilities or commission custom research from independent third parties (often business or technical resources, rather than financial experts). These inclinations pose clear threats to already compromised profit margins.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2146d31b-2f5a-473e-966e-581c9b175449", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.105, "w": 0.205, "x": 0.087, "y": 0.428 }, "kind": "paragraph", "text": "In the U.S., Regulation FD authorized the release of company information to all constituents. In the U.K., the controversial Myners Report (although not enacted as regulation) advocated an end to soft-dollar commissions, and has raised the profile of soft-dollar practices.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "32d8834f-e12c-422a-87af-5daf7f33cf85", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.135, "w": 0.205, "x": 0.087, "y": 0.177 }, "kind": "paragraph", "text": "Goldman Sachs, long known for its high-touch services, now offers its customers access to simple transactions through REDIPlus, the firm's ECN. Brown Brothers Harriman, which traditionally bundled sell-side research with trade execution service for buy-side firms, decided that it could not offset the high costs of producing research with underwriting income, and subsequently discontinued that part of its business.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e262663e-5c31-40e4-b380-9c7f289a114c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.015, "w": 0.25, "x": 0.087, "y": 0.942 }, "kind": "source-note", "text": "7 Creating value | IBM Institute for Business Value", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "76e460c2-af71-4e70-84a1-1ce1a8479ffd", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.021, "w": 0.135, "x": 0.087, "y": 0.038 }, "kind": "title", "text": "Creating value", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "022b0e50-8f95-4519-9b9a-f81c3e5307c7", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [ { "to": 8, "from": 5, "name": "Aha Moment", "slug": "03-aha-moment", "bestFor": "Data-heavy sections, research findings, analytical arguments", "matchId": "9608f37f-b12f-4b23-ad27-d5c2bc64f0b2", "evidence": "The key messages slides provide a series of aha moments for the audience.", "position": 0, "objective": "What are the key messages for creating value?", "structure": "The Problem/Question -> What the Data Shows -> The Insight", "confidence": 0.6, "description": "Establish a tension, present data, then deliver the insight that changes everything" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }