Canaccord ‘up for sale’ in shake-out of City’s brokers

CITY stockbrokers are facing the toughest times in recent history.

Regulations known as Mifid II have banned them from offering services like research for free in the hope of winning broking work. That has made it harder for them to differentiate themselves and win broking gigs. Fund managers are refusing to pay for the research they used to get gratis, scaling back to one or two brokers instead of a dozen.

The unintended consequences for UK Plc are huge. Scores of analysts have been fired as brokers cut back on their costly research operations. That has left all but the biggest

British businesses struggling to get independent research done on them that might grab investors’ attention. In other words, if you work for a FTSE-250 company, you may well find its growth is curbed because it can’t raise the investment it needs.

The share price-moving “consensus forecasts” — an average of how much profit City analysts predict a company will announce on results day — are increasingly a meaningless mean of two or three.

Research quality has suffered as desperate analysts try to come up with eye-catching ideas to get themselves noticed. Original, they may be. Useful, they’re often not.

Into the mess comes the uncertainty of Brexit, which means fewer firms using brokers to raise new money and subdued share trading.

Faced with all these cost squeezes, brokers are under more pressure than ever to merge and cut overheads. A brokerage with 200 SME clients will survive. Fifty? No chance.

So, today we learn that Stockdale and Shore are getting together. Shore is paying just £92,000 for each of Stockdale’s 52 corporate clients. Finncap and Cavendish have already