UPDATE 1-Large research firms may lose share to small cos-survey
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July 27 (Reuters) - Small U.S. equity research firms may gain market share from their larger rivals through next year, helped by the dislocation of some large investment banks and the exodus of talent to these smaller firms amid the financial crisis, according to a survey of buy-side analysts released on Monday.
Small firms' market share jumped this year, but large investment banks, such as Banc of America-Merrill Lynch Securities, continued to dominate as top research providers of U.S. equities for buy-side analysts, research group Greenwich Associates found.
The Connecticut-based financial consulting firm's survey of 863 buy-side analysts showed that Banc of America-Merrill's research is the most widely used for U.S. equities, while J.P.Morgan Securities' research ranks a close second.
According to the results of the Greenwich Associates' 2009 U.S. Equity Analysts Study, Barclays Capital, JP Morgan and Sanford C. Bernstein share top honors for overall quality of their research. Barclays and Bernstein were also among the top six research providers in terms of market share, along with Citigroup and Credit Suisse.
But the fall of Bear Stearns and Lehman Brothers and the merger of Merrill Lynch with Bank of America Corp (BAC.N: Cotización) created significant disruptions in the supply and quality of the research used by institutional investors in U.S. equities, Greenwich said.
This year, "bulge bracket" firms captured 68.5 percent of U.S. buy-side analysts "vote," down from about 73 percent last year, while their smaller rivals' -- mid-sized brokers, regional firms and sector specialists -- market share jumped about 5 percent to about 29 percent this year, the consulting firm said.
"The gains achieved by these smaller providers did not necessarily come at the expense of individual bulge bracket research platforms," John Colon, a consultant at Greenwich, said.
"Rather, sudden consolidation disrupted existing research relationships, some of which were recaptured by other bulge bracket firms while others were won by smaller providers and specialists," Colon added. Continuación...