dispatch
In my loft, there’s an old booklet about the size of a magazine that lists brokerage analysts, alongside some decades-old notes from my reporting days.
My handwritten comments are jotted down next to each name, noting little things about them—perhaps they were “talkative” or maybe “hard to reach.” These were vital for financial journalists back in the 90s when covering companies and stock market trends.
I remember this pamphlet was shared during the Extel Awards, an event where fund managers would vote for the best analysts in their sectors. They always called it the “Oscars of the City.”
I attended for the first time about 30 years ago when Extel was still under the ownership of Pearson, the publishers of the Financial Times. The keynote speaker that day was Alistair Darling, who later became Prime Minister.
Now, research has become a crucial business aspect. Extel’s influence spans across sales teams, trading desks, brokers, analysts, fund managers, and even investor relations people around the globe.
Unfortunately, the previous lunchtime gathering is now history. It transitioned to a black-tie dinner format in 2021, and attendees had to wait until September for the latest pan-European awards, which were announced just yesterday.
Small-cap stock woes
One noteworthy point from a domestic angle was the ranking of UK Small and Medium Cap (SMID) brokers in 2026, a sector that has really taken a hit lately.
This downturn can be attributed to the second version of the Markets in Financial Instruments Directive (MIFID II) introduced in January 2018, which aimed to enhance investor protection and transparency in the market.
Under this directive, brokerages had to start charging for research fees separately, which used to be included in their overall brokerage fees. This change hit the small and mid-cap area of the UK stock market particularly hard.
“MIFID II didn’t completely devastate equity research, but it definitely created challenges,” remarked David Enticknap, the CEO of Extel. This is reflected in the number of analysts; in 2007, there were 29 retail analysts focusing on small and mid-cap firms, a number that has since dropped. Support services analysts also fell from 26 to 20.
The 2007 rankings featured some significant players, many of which are still around today, like Investec and Peel Hunt, alongside older firms such as Bridgewell Securities and Seymour Pearce.
Recent years have seen further consolidation, with Numis Securities being acquired by Deutsche Bank in 2023 and other mergers among various firms.
This decline extends to sector coverage as well. Back in 2007, there were 18 sectors surveyed in the UK SMID rankings, while yesterday’s results only included nine, leaving out important sectors like chemicals and logistics.
However, following a 2023 literature review by a legal partner, the Financial Conduct Authority has made adjustments to allow asset managers to bundle some research and trade execution payments again.
Enticknap sees this as a positive sign for recovery: “The potential is there, but research must gain value. The buy side has to appreciate this. Where there’s research, liquidity will follow,” he stated.
“We also need younger individuals in this field,” he noted.
Years ago, Darling pointed out that a solid ranking in Extel’s research could substantially boost an analyst’s salary. However, attracting new graduates nowadays is tough, especially since many are looking toward the tech sector for wealth. But it’s crucial to reinstate the notion that being a broker analyst is a respected vocation for the well-being of the London market.
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Coming soon
June 17th: May inflation data
June 18th: unemployment figures
June 19th: retail sales data
