Analysis used to be a free perk, now it could cost $3500/hr

Morgan Stanley plans to charge about $3500 an hour for private meetings with its stock analysts once new European Union financial rules kick in next year, say people with knowledge of the plan.

The fee is on top of the annual rate Morgan Stanley plans to charge clients for basic access to its equity research portal once the MiFID II regulations come into force in January, they said.

The bank also quoted a small client $25,000 annually for five users for basic equity research access and five total hours of analyst time, another person said.

The price tags make the time of a Morgan Stanley analyst more valuable than even a top commercial lawyer — the hourly rate for a partner at a prestigious London law firm can be as much as $1450.

With less than three months to go before the European Union’s revised Markets in Financial Instruments Directive kicks in on January 3, investment banks are still haggling with their money-manager clients about how much to charge them for research and advice. Under the revised rules, analyst notes and other services must be paid for separately from trading commissions.

Prices have varied widely as the industry struggles to value analysis that was typically distributed for free.

The bank’s pricing after MiFID II is being driven by how often and how many users at a client access written research as well as how much time they spend with analysts, according to global research head Simon Bound.

Clients are being much more disciplined “about what resources they are consuming, which historically hasn’t always been the case”, Bound said in an interview last month. “We have for a number of years done a very good job of monitoring where our analysts spend their time. That’s been very helpful.”

McKinsey & Co estimates investors will slash more than $1 billion of spending as they become pickier about what they pay for.

UBS Group AG is proposing to charge clients about $40,000 a year to access basic equity research.

Barclays Plc is also pricing its read-only European research at about $40,000, while JPMorgan Chase & Co is suggesting as little as $10,000 a year, the lowest price to emerge so far for analysis of stocks. —