MDC Financial Research believes that the new paradigm of Wall Street research is rapidly moving away from large Wall Street brokerage houses and those who helped to create not clarity but rather market failure. What was once viewed as synergistic and efficient became ridden with self-serving conflicts. The new paradigm will be intelligent, independent, and on the side of the clients that they serve. The clients are on the “buy-side,” and future independent research will be on the same side with them.
Traditional “sell-side” research has been provided by those organized as Broker/Dealers who could only provide research that was incidental to their brokerage business. As technological efficiencies caused brokerage commissions to shrink, research was used to enhance commissions. Using research to sell the securities of the very companies with which they had investment banking relationships, and using research to sell trades as a means of generating commissions, is why the old paradigm of brokerage research has been correctly labeled “sell-side” research.
The new paradigm of Wall Street research will have the synergies of serving multiple clients, but it will not be selling a company or selling a trade. Those that provide the new paradigm will be organized as Investment Advisors who through a subscription model can bring expertise in-house at a fraction of the cost of hiring additional buy-side analysts. The new paradigm of Wall Street research will be “Outsourced Buy-Side℠.” It will bring greater efficiency to capital markets, and MDC Financial Research intends to lead the way.