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Euronext Sees Research Growth Opportunity in Substantive Research Acquisition

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Technology has redrawn how investors obtain and buy research, and for many the new landscape is forcing them to reassess their requirements and their tech spend.

With more financial regulations on the horizon expected to add yet more complexity to market participants’ research operations, European stock market operator Euronext has seen an opportunity to provide its clients with more certainty.

In the autumn, the operator of bourses in the Netherlands, Belgium, Ireland, Portugal, Italy, Norway and France acquired Substantive Research, a UK-based company that since 2015 has provided research costing and benchmarking information. The deal saw Substantive Research incorporated into Euronext’s Commcise subsidiary, a cloud-based commission management tool that enables clients to obtain valuations on research, track research consumption and manage payments for their intel.

Perfect Timing

According to Commcise chief executive Amrish Ganatra, the acquisition came at a key moment for markets.

“Investment research is in a state of flux, with technology changing the focus and capacity of the sell side, and the consumption behaviour of buy side investment functions also adapting to new formats and evolved search, aggregation and extraction capabilities,” Ganatra told Data Management Insight.”

Alongside this, post-MiFID II regulatory evolution will tempt asset managers to return research costs to their end investors, he said.

“The evolution of demand globally has implications for market share and pricing, and European regulatory upheaval is accompanied by the need for greater disclosure and reporting – Commcise and Substantive are combining forces to provide tools and data so that firms can retain and build on their competitive advantage across all these market dynamics.”

Commcise was purchased by Euronext in 2018 and has been nurtured to help clients manage their research purchase and payment activities. As the company looked to scale its operations, it saw an opportunity in Substantive Research, which was also in the market for fresh resources to drive its own expansion ambitions.

Ganatra said Commcise saw Substantive Research’s price benchmarking services as a good fit.

“Substantive Research’s successful expansion into benchmarking market data pricing showed that financial institutions needed greater transparency across both research and data,” he said. “Clients strongly encouraged Substantive Research to expand their benchmarking coverage of market data providers, but the firm needed resources and infrastructure to undertake that expansion at pace.

“They began a process to assess who might be the best future partner in the spring of 2024, after which it became clear that the Euronext acquisition would be the one to successfully drive Substantive’s scaling journey, plus the ability to create entirely new areas to benchmark.”

Joint Development

Clients are now able to access Substantive’s services via the company’s own dashboard and Commcise will offer new methods to view integrated datasets and insights. Ganatra said that new products will be developed jointly between the companies and shared on their own platforms.

Substantive’s databases will be ringfenced from Euronext’s exchange and market data and the acquired company will govern its own data as before.

Ganatra said there is “obvious excitement” among the research and data markets that new products would evolve from the newly combined businesses.

“Substantive will continue to develop its own dashboard infrastructure so that clients that are not on Commcise benefit from the expansion of coverage and insights, and for mutual clients Commcise will provide new ways to view integrated datasets and insights,” he said. “The dashboard will be developed more quickly than before on an upgraded tech stack.”

Research Liberated

The combined tools of the two companies will help clients as greater regulatory and disclosure requirements are laid on clients, Ganatra said. At the same time, the cloud has liberated research provision, creating a technology-agnostic environment in which competition between research providers has flourished, but which also means vendors will succeed and fail, according to market demand.

In such a state of rapid transition, it is important that capital markets participants can benchmark research providers, said Ganatra.

“Price benchmarking becomes more important than ever, as firms seek greater transparency on trends in pricing, pricing models and agreement structures,” he said. “They also need to conduct scenario analysis on potential alternatives, modelling both what the cost benefits are of transferring in the short term, but also understanding the pricing journeys they are signing up to in subsequent years and renewals with new providers.

“Substantive Research has a track record in delivering these insights, and with Euronext and Commcise’s investment in its tech and people it will in time gain the ability to cover clients’ entire provider lists, with all the top-down insight that this perspective will make possible for clients.”

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