Unbundling financial services: The case of brokerage and investment research

Sébastien Galanti and Anne-Gaël Vaubourg (anne.gael.vaubourg@univ-poitiers.fr)
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Anne-Gaël Vaubourg: CRIEF - University of Poitiers

Economics Bulletin, 2020, vol. 40, issue 1, 473-484

Abstract: 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 (search for similar items in EconPapers)
JEL-codes: G2 L1 (search for similar items in EconPapers)
Date: 2020-02-10
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Related works:
Working Paper: Unbundling financial services: The case of brokerage and investment research (2020)
Working Paper: Unbundling financial services: The case of brokerage and investment research (2020)
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