New York – As we sit down for Thanksgiving dinner tomorrow, the
research industry, like many others, will be wondering just what part and how
much of the turkey they can expect. The
first thing we might notice is that, despite a number of shocks and scares, the
bird isn’t that much smaller than it was last year. This is encouraging since
there have been a number of events that pointed towards perhaps serving squab
instead of turkey.
After providing a new interpretive guidance on soft dollar
transactions in the summer (yeah), Chris
Cox wrote to Capitol Hill indicating he thought the soft dollar safe harbor
should be abolished (Boo). It looked
like the SEC was going to take the bird right off the table. With the exception
of the paid-for and hard dollar only shops, there was not going to be much
turkey to go around. After being
rebuffed by Senator Schumer, though, this nervousness began to settle down.
Another factor
affecting the markets this year has been the increased use of CSAs and CCAs to pay for external research. Of
import, was the letter that Goldman received from the SEC indicating that they
would not seek action if Goldman were to pay research firms that were not B/Ds through
the us of CCAs. This opened the door for non-B/D research providers to dine at
the commission table.
The sub-prime
mortgage fallout has taken a good deal of joy out of the sell-side research
table that had been already dinged by the Global Research Settlement. Even a few long only money managers got
winged by the sub-prime fiasco. But it has not diminished the festivities at
the hedge fund table. In fact, many research providers have been working the
phones his year trying to wrangle an invitation to Hedge-Feast-2007.
So when we spend the obligatory time tomorrow thinking
through all of the things to thankful for over the past year, most of them will
be Houdini like escapes from near tragedy, rather than Brett Farve long bombs.
Happy Holidays!
Note: we will not be posting a blog this Friday.
Posted at 09:46 am by Thomas Hutchinson
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