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Buy Side Wants Aggregated View of Sell Side

A new report suggests that most sell-side firms have been doing it all wrong. Apparently, it's about one-stop shopping.

The sell side, ever looking for new and more effective ways to communicate with its buy-side clients, may be able to take away a few tips from a recent study conducted by Sapient, a Mass.-based business and technology consultancy.

The report indicates that, although the sell side has been very active in creating new portals, Web sites and other avenues to communicate its research to the buy side, it has largely been missing the mark. The buy side is not interested in visiting 20 Web sites from 20 of the sell-side firms it does business with, but rather prefers aggregated consortia where portfolio managers can see research and pricing from multiple sell-side firms in one place.

That's because the buy side is not interested in knowing where each sell-side firm stands regarding an individual company or stock but rather wants to learn how the Street is viewing a company's condition as a whole. "The problem is not getting ideas from the sell side but knowing where the market is in aggregate," says Martin Zagorsek, practice lead of Sapient's capital-markets division and author of the report (Listening to the Buy Side: Tactics for Delivering Value).

Such aggregated views of pre-trade information are offered by consortia like themarkets.com (which provided Sapient with contacts for the study but did not participate otherwise), and, on the execution side, by tradeweb, bondhub, and Fxall, says Zagorsek.

He says the sell side should be looking into new forms of electronic communication that can more quickly and directly deliver breaking news to buy-side clients that will act on it. "For example, analysts produce much commentary such as morning notes and internal calls with their own sales force -- real-time reactions to events. The sales force then relates this information to (the buy side) verbally."

The sell side, he emphasizes, needs to figure out and develop new ways to communicate such information to its buy-side clients electronically. One way this might be done, he says, is through instant-messaging technologies, which are "catching on like wildfire."

"Instant messaging could be used to create a more immediate and intimate channel with buy-side firms," Zagorsek says, adding that there are many improvements that can be made over a standard AOL-type instant-messaging system. Reuters, he adds, is working on such a system.

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