A Singapore-based fintech firm wants to capitalise on new European rules requiring banks to charge for research by expanding beyond Asia to offer analysis on US and European financial markets.
Smartkarma, which distributes research from about 400 analysts over an online platform, has been encouraged by the positive response to its Asian product since the firm started three years ago, said its chief executive Raghav Kapoor.
"Our client base is growing rapidly, and includes all professional investors with interest in Asia or Asia-driven themes," said Mr Kapoor via e-mail. "Many of these are based in the United Kingdom/Europe and the United States. A natural growth path for Smartkarma is to move closer to these domiciles."
Smartkarma hopes the European Union's new Markets in Financial Instruments Directive (MiFID), which will require money managers to pay for research separately from broking services from January, will make it easier to attract analysts to offer research over its platform.
The so-called MiFID II rules are expected to curb profit margins at asset managers, who will have to budget for research for the first time, and force firms to justify the cost of their teams of analysts.
JPMorgan Chase plans to charge US$10,000 (S$13,450) a year for read-only access to research on stocks, while Barclays has proposed a similar package for £30,000 (S$54,770). Others plan to distribute some research for free.
"The whole problem right now is that every bank is coming up with crazy pricing, all sorts of various things, which doesn't make the life of fund managers easy," said Mr Kapoor. He added that Smartkarma offers a simple pricing solution for customers and an attractive way for analysts to distribute their work.
Smartkarma charges an annual flat fee of US$7,500 per user to the "several hundreds" of asset-management firms which buy its service, he said. It pays its analysts freelance fees based on the popularity of their research among users. The most popular analysts can earn more than US$10,000 per month.
Last year, Paris-based Societe Generale signed up Smartkarma to provide Asian equity research to its clients.
BLOOMBERG
