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Sébastien Galanti and Anne-Gaël Vaubourg
''Unbundling financial services: The case of brokerage and investment research''
( 2020, Vol. 40 No.1 )
Brokers were previously allowed to provide brokerage and financial research as a single package, but unbundling rules recently introduced in Europe now oblige them to charge separately for the two services. To analyze the effect of this regulation, we consider a theoretical duopoly model between a broker who offers a brokerage service and an investment research service and an independent analyst who offers a second investment research service. We show that unbundling rules increase the profitability and market share of the independent analyst and improve social welfare. These findings suggest that unbundling rules are relevant to the sustainability of the independent research industry.
Keywords: analysts, brokers, independent financial research, unbundling rules, social welfare
JEL: G2 - Financial Institutions and Services: General
L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : May 14 2019 Manuscript Accepted : Feb 10 2020

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