- Average budgets globally have only increased by 0.4% in monetary terms in H12026, despite sell side insistence that ingesting their content into models should be priced at a higher rate
- As a proportion of AUM, North American research spending has decreased by 6% this year while European spend increased 1% - however US research budgets remain significantly higher than European budgets
Substantive Research, the research and market data discovery and pricing analytics provider, today publishes the findings of its latest survey into investment research spending and consumption, highlighting how research spending continues to flatline despite new AI-driven requirements. UK and EU buy side spending on investment research still significantly lags that of US counterparts, illustrating why the FCA and EU regulators have rolled back MiFID II for research.
Substantive Research’s latest survey data shows:
- The sell side has yet to monetise direct feeds of their content into buy side client LLMs; average budgets globally have only increased by 0.4% in H12026.
- As a proportion of AUM, North American research spending has decreased by 6% this year – the US research spending recovery trend over the last three years has reversed, and American budgets are still over 50% lower than in 2018.
- European budgets stayed broadly flat, increasing by just over 1%, having decreased by over 60% since 2018; European research spend from asset managers is still 40% lower than their American peers.
- Spend on AI-enabled research analytics and tooling has also taken more market share away from brokers and independent research providers; spend on tooling and analytics has increased 40% in one year, and is now taking 7% of an average research budget that more typically rewards traditional research providers.
- 56% of an average research budget globally is taken up by each firm’s top 10 research providers, with 23% taken up by their top 3.
- Average spend on Independent Research Providers (IRPs) still only represents 8% of average total budgets.
Mike Carrodus, CEO of Substantive Research, said: “From a supply and demand perspective, the research industry is now rapidly transforming itself as AI changes the way fund managers want to consume research, and how providers create and deliver these insights. But until now, funding and budgeting for research has not evolved to accompany that evolution. The key question that needs to be answered is whether providers will accept that delivering this content directly into clients’ models is just another channel, or whether there is incremental value and cost that should be reflected in new pricing for this market.”
He added: “The buy side is already dealing with higher data costs year on year, so if providers do insist on greater remuneration for LLM-delivered research then something will have to give. In the UK and the EU, that could be moving to CSA-funded research budgets, but so far, those dominoes are still waiting to fall. Despite the fall in American research budgets so far this year, America still has structurally larger budgets to accommodate a changing landscape. Whether Europe can also adapt in time to compete remains to be seen.”
Background – FCA’s efforts to stimulate the research market post-MiFID II
In July 2024, the FCA released new rules within COBS2 covering segregated mandates, making it easier for asset managers to charge for research alongside trading commissions, as they did pre-MiFID II. This showed that the FCA had listened to the buy side’s concerns and allowed for both strategy- or firm-level budgeting for research, which was a crucial concession in order to encourage the market to engage and move across. More recently, PS25/4 was released in May 2025, which covered pooled funds, which aligned with this approach and removed the last “dealbreakers” according to asset managers.
Adoption of the FCA’s new payment optionality has been slow – whilst the majority of asset managers want and expect the UK and European buy sides to move to CSA-funded research budgets. It will only be in the second half of 2026 that this switchover is likely to begin in earnest, due to enduring concerns regarding how this shift will be received by asset owners, as these costs are once again passed on to them, as they were pre-MiFID II.
Universe of firms covered by the research:
- 50 of the largest asset managers surveyed
- AUM: $20 Trillion
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Geographic split by headquarters: 35% N. America, 25% EU, 40% UK
