Unbundling Research, in financial markets including crypto investing, refers to the practice of separating the cost of investment research services from the commissions paid for trade execution. This distinct pricing model provides transparency on the true value of research, independent of trading activity.
Mechanism
Traditionally, brokers offered research as a ‘bundled’ service alongside trade execution, obscuring its true cost. Unbundling necessitates that investment managers explicitly pay for research through direct fees or a research payment account. This separation requires clear contractual agreements and valuation mechanisms for all research deliverables.
Methodology
The strategic objective is to enhance transparency, accountability, and value for money in research consumption, influenced by regulations such as MiFID II. For institutional crypto investors, adopting unbundled research encourages a more rigorous evaluation of research quality and relevance, ensuring that resources are allocated to insights that genuinely inform investment decisions and risk management strategies.
U.S. best execution demands a defensible process of seeking competitive outcomes; Europe mandates a granular, data-driven demonstration of all sufficient steps taken.
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