Alpha Exchange, an institutional research and knowledge sharing platform, has released a sophisticated MiFID II toolkit comprising firm-wide research tracking and evaluation tools.

Emma Margetts, Co-Founder, said that at this point in the MiFID II evolution, what is clear is that asset managers’ research analytics are incredibly poor. 

“CIOs and research managers need to establish a mechanism to assess the quantity and quality of research being consumed and its ability to contribute to better investment decisions. Completeness of capture is key. Alpha Exchange provides the technology to do this,” she said.

Under the rules that take effect January 2018, asset managers will be required to explicitly separate, or "unbundle", their trading commissions from investment research payments.

This imposes a major transactional and administrative burden on asset management firms. 

“Firms are in the process of determining whether to charge clients for the research in what is called a Research Payment Account or to take the cost of research on to their P&L and pay hard dollars,” Margetts said.

“Alpha Exchange assists asset managers in both approaches. For many firms if they are to take research onto their P&Ls this equates to the second largest cost to the company next to headcount,” she added.

Margetts told Africa Global Funds, that there is impact to African-based asset managers if they run funds domiciled in UK/Europe. 

“Hence those asset managers who are based globally and analyse African investments will be affected. In January 2018 there will be a separate research charge on all investment research received,” she added.  

The new toolkit enables asset management firms to monitor research consumption across their firm (multi-platform enabled) with the ability to rate research and analyst interactions in real time. 

In addition, the toolkit includes research budgeting software and an integrated payment portal supporting RPA and hard dollar payments. 

The fintech company was launched in New York in 2016 as a platform for the discovery, consumption and compliant payment of investment research. 

According to Margetts, there are a few research marketplaces, but Alpha Exchange goes beyond being a pure research aggregator by enabling fund managers to “purchase research with the flexibility to add on additional services such as direct analyst access, bespoke work and other high touch research services”. 

“Alpha Exchange imbeds itself in the analysts workflow with an internal research management solution and collaboration tools. We are the first firm to undertake real time research tracking and rating from within a buy-side analysts workflow across platforms,” she said. 

Margetts added that 70% or more of research consumption takes place off platform (in the inbox/calls/via other distribution vendors), so it makes sense to tackle research consumption and rating with an integrated approach. 

“To solve the MiFID II asset management research dilemma, a solution needs to be imbedded in the analysts daily workflow - this is the technology solution we have developed,” she said.