Extel 2018 Market Trends Report

1. Understanding themes and market practice
across the research provision landscape

2. FOREWARD
“Extel captures market trends through supplementary questions during the annual survey process. There is no
shortage of studies on market evolution; Extel is the largest in Europe, gathering 1.28m responses from 11,333
investment professionals during a five-week period in March/April 2018. Insights gathered from the survey
guide business leaders through decision-making challenges that are a consequence of regulatory change.
Imagine if this trend analysis was customised to your client base, split by geography, sector or client tier? How
do the clients that you service value brokerage and advisory services compared to the market or your
competitors? Extel can present the conclusions that you need to help drive your business strategy.”
 Buy-side clients value written research most out of advisory services, and want this delivered passively (through email or a third-party portal). Endorsed by Extel’s
pulse survey in Nov 2017 where the buy-side valued research 20% more than the sell-side believed; this trend varies materially across different client demographics.
 Direct analyst access and roadshow meetings are valued more than analyst calls. Like research, this trend moves materially according to the client base that is
scrutinised. Anecdotal evidence suggests that there has been significant pushback on analyst meetings in Q1 & Q2 2018, although this is easing off as a “spend it or
lose it” mentality starts to kick-in.
 Research: Back to Basics? Aligned to how the Buy-side voted for research coverage in the traditional survey, there is a clear trend towards stock coverage /
fundamental research. This suggests the Buy-side (as a theme) want research providers to focus on the nuts and bolts of research provision rather than ideas,
thematic and macro content.
 Access to liquidity is a consistent theme across execution trend feedback, in selection of electronic trading and high-touch sales trading. There is speculation that
this may sound the death knell for brokers without a balance sheet.
 There is a shift in the use of IR budgets from formal disclosure & AGMs towards external IR services and analyst days. Analyst days are getting smaller but there is
the realisation that the onus of investor outreach is shifting to the corporate.

3. WHY EXTEL?
Market Intelligence Client StrategyBest Practice

4. HOW WE CAN HELP?
Marketing Intelligence
Q. Are you focused on the right areas? How do you compare?
A. Understand the key themes that the Buy-side, Sell-side and
Corporates are focused upon.
Best Practice
Q. What can you learn from those that do well in voting?
A. Understand the correlation between the best performers, their
structure and approach.
Client Strategy
Q. How do your clients want to engage with their vendors / partners?
A. Understand the preferences and focus of a discrete client base.

5. MARKET TRENDS

6. METHODOLOGY & COVERAGE
DEMOGRAPHICS:
MARKET
TRENDS
We present the conclusions from the Market Trends questions gathered during the
Extel 2018 survey; over 1.28m responses from the 11,333 participants.
Voters were presented with 14 questions across the following categories:
• Research / Sales (5)
• Trading & Execution (4)
• SRI / ESG (2)
• Corporate Access (1)
• Derivatives (1)
Please note: These results present the responses at a macro level. Extel is able to
provide incremental and customised analysis at the following levels:
• Buy – side Geography (e.g. How did German-based buy-side firms respond)
• Categories & Sectors (e.g. Buy-side firms voting in the Banks Sector)
• Band (e.g. Buy-side firms within the Band 10 category)
• Peer Group (Bespoke buy-side feedback, a minimum of 15 firms required)
• Benchmarking - buy-side firms that voted for a specific sell-side firm
Should you have any further questions please do not hesitate to contact us.
Buy side
Votes
Firms:
Individuals:
2,682
7,721
Sell side
Votes
Firms:
Individuals:
241
2,040
Corporate
Votes
Firms:
Individuals:
1,099
1,572
1.28m Votes

7. RESEARCH SALES
DEMOGRAPHICS:
MARKET
TRENDS
QUESTION ONE: QUESTION TWO: QUESTION THREE:
What Sell-side advisory services do
you value?
How do you rate the value of the
following research products from sell-
side research?
How do you rate the value of the
following attributes of a sell-side
research service?
Category:
Research Sales
Participants:
All Voters
(Aggregate Results)
Responses:
9105
Less Important More Important
Corporate
Access
Sales
Research
Market
Commentary
Valutation
Models
Company Notes & Updates
Local Market
Insights
Sector
Insights
Stock Coverage
Global Context
Timeliness
Contrarian Views
Independence
Long-Term Themes
Local Market Insights
Sector Insights
Stock Coverage

8. RESEARCH SALES
DEMOGRAPHICS:
MARKET
TRENDS
QUESTION FOUR: QUESTION FIVE:
How do you rate the value of the following attributes
or services from sell-side research?
How do you rate the value of the following delivery
channels for sell-side research?
Less Important More Important
Incoming Analyst
Calls
Direct Analyst Access
Written Research
Research Aggregator
Sell-Side Portal
Email
Written
Research
Direct Analyst
Access
Roadshow 1x1s Roadshow
Group Meetings
Incoming
Analyst Calls
Reverse
Roadshows
Sell-Side Portal 26.5%
Research Aggregator 23.4%
14.8%Hard Copy
35.3%Email
Less Important More Important
Category:
Research Sales
Participants:
All Voters
(Aggregate Results)
Responses:
9105

9. TRADING & EXECUTION
DEMOGRAPHICS:
MARKET
TRENDS
QUESTION ONE QUESTION TWO: QUESTION THREE:
What do you value in… Electronic
Trading?
…Program/Portfolio Trading? …Sales Trading?
Category:
Trading &
Execution
Responses:
342
Less Important More Important
Analytics pre/during/post
trading & TCA
Access to unique liquidity
Performance
of algos
Market
impact
Performance of
execution platform
Quality of service
High touch
service
Market impact/quality of execution
Ability to find liquidity in Small & Mid Caps
5.45
5.55
5.7
7.5
7.7
8.5
9.5
Participants:
All Voters
(Aggregate Results)

10. NON CASH / DERIVATIVES
DEMOGRAPHICS:
MARKET
TRENDS
QUESTION FOUR QUESTION FIVE:
Delta One/ETFs services? Convertibles & Derivatives Research?
Category:
Non Cash / Derivatives
Responses:
293
Less Important More Important
High touch service
Access to capital and
risk pricing
Market impact/quality of execution
Liquidity & Trading…
Sales Service
Trade Ideas
59
55
49
46
39
Trade Ideas Sales Service Liquidity & Trading
Capability
Integration Of
Analysis With
Underlying Equity/
Bond
Direct Analyst
Contact
What do you value in the following…
Participants:
All Voters
(Aggregate Results)
What do you value in the following…

11. SRI / ESG
DEMOGRAPHICS:
MARKET
TRENDS
QUESTION ONE: QUESTION TWO:
What do you value in SRI/ESG Research/Analysis? To what degree do you agree with the following statements?
Category:
SRI / ESG
Participants:
All Voters
(Aggregate Results)
Responses:
172
Climate
Change/Green Issues
Stock Specific
Analysis
Thematic Pieces Research
Less Important More Important
Disagree Disagree Disagree
Agree Agree Agree
0%
20%
40%
60%
80%
100%
Companies Take Sustainability
Seriously
CSR Reports are Valuable Sustainability Issues Impact Stock
Values
15.5
17.7
18.6
20.3
27.9
Depth Of Coverage
Integration Into All Research & Advisory Services
Climate Change/Green Issues
Stock Specific Analysis
Thematic Pieces Research

12. CORPORATE ACCESS
DEMOGRAPHICS:
MARKET
TRENDS
QUESTION ONE: QUESTION TWO: QUESTION THREE:
Please value the following company &
expert meeting services?
Which Factors are Important when
Measuring IR Effectiveness?
Category:
Corporate Access
Participants:
All Voters
(Aggregate Results)
Responses:
78 Legend:
= 2017 = 2018
0
5
10
15
20
Conference 1x1s
Conference Group
Meetings
Conference Main
Tracks
Reverse RoadshowsIndustry Experts
Roadshow 1x1s
Roadshow Group
Meetings
Low
High
Relative Stock Price
Volatility
Market Surveys
Perception Studies
Board Satisfaction
Composition of Investor Base
Investor/Analyst Feedback
Which social media channels do
Companies use for IR activities?
Less Important More Important
Roadshow 1x1s
Conference
Group
Meetings
Conference
1x1s
1.9
1.5
Other
1.4
2.1
1.1

13. CORPORATE ACCESS
DEMOGRAPHICS:
MARKET
TRENDS
QUESTION FIVE:
What type of Sell-side research coverage do Corporates find useful?
Category:
Corporate Access
Participants:
All Voters
(Aggregate Results)
Responses:
78
= 2016 = 2017 = 2018
Recommendations Sector Research Morning Notes Company Report Target Prices
High Importance
Low Importance
* Target Prices Introduced in 2018
*
Legend

14. BUDGET BREAKDOWN: SALARY SPLITS BY ROLE:POSITION:
Award:
Regional Level
Period:
2018
(2017 / 2016
where detailed)
2018
2017
2016
<€250k €250k-500k €500k-1m €1m -2m >€2m
ALLOCATION OF IR BUDGET:
IR DIRECTOR SALARY IR MANAGER SALARY IR ASSISTANT SALARY
<€50K €50-70K €71-100K €101-120K €121-150K €151-200K >€200K
COST STRUCTURE
IR BENCHMARKS
2018
2017
2016
Roadshows/Investor meetings Analyst/Investor days
IR website Annual report/Formal disclosure/AGM
External IR service

15. FREQUENCY OF ANALYSTS DAYS: NUMBER OF BROKER CONFERENCES – SPLIT BY ROLE:POSITION:
WITH
CEO/CFO
WITH IR-
ONLY
WITH
DIVISIONAL
DIRECTORS
OVERALL
None 1-2 3-5 6-9 Over 9
Never
Once a Year
More than Once a Year
Once Every 2 Years2017
2016
2018
2017
2016
10-20 21-30 31-40 41-50 Over 50
NUMER OF PEOPLE INVITED:
Inner = 2018
Middle = 2017
Outer = 2016
2018
INVESTOR ENGAGEMENT
Award:
Regional Level
Period:
2018
(2017 / 2016
where detailed)
IR BENCHMARKS

16. LOCATIONS VISITED: NUMBER & TYPE OF MEETING:POSITION:
ORGANISATION OF CORPORATE ACCESS:
UK
USA(EastCoast)
France
Germany
Switzerland
Nordics
SouthernEurope
USA(WestCoast)
Asia
Benelux
Canada
Japan
None 1 2 3+
CEO/CFO One-on-ones
CEO/CFO Group Discussions
IR-only One--on-ones
IR-only Group Discussions
Divisional Director One-on-ones
Divisonal Director Group Discussions
Overall
0-50 51-100 101-200 201-300 Over 300
INVESTOR ENGAGEMENT
Award:
Regional Level
Period:
2018
(2017 / 2016
where detailed)
IR BENCHMARKS