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Rating:Will ETF Shops Pay $50K or More For Wirehouse Data and Access? Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, January 24, 2017

Will ETF Shops Pay $50K or More For Wirehouse Data and Access?

News summary by MFWire's editors

One of the big three wirehouses is reportedly charging ETF shops $50,000 or more for access to its horde of FAs.

Ben Johnson
Morningstar
Director of Global ETF Research
BlackRock [profile] and other unnamed ETF shops have signed on to a revised "ETF Data Analytics Agreement" from Morgan Stanley, Sabrina Willmer of Bloomberg reports, and that involves them paying the wirehouse between $50,000 (firms with up to five ETFs) and $550,000 (firms with more than 100 ETFs) per year. Morgan Stanley has more than 15,700 financial advisors in its wirehouse, managing more than $2 trillion in client assets, including $877 billion in fee-based accounts.

There's no word on whether the other two ETF titans, Vanguard [profile] and SSgA [profile], signed on to the agreement.

Spokespeople for Morgan Stanley, BlackRock, SSgA, and Vanguard declined to comment on the agreement.

Platform fees are standard in the distribution of traditional, open-end mutual funds. Yet ETFs tend to have such costs stripped out, with much less in their expense ratios in the way of fees that could be used to pay for platform access. Bloomberg, citing its own data, says that more than half of ETF flows in the last year went into ETFs charging 9 basis points or less.

Bloomberg notes that the agreement comes as Morgan Stanley is seeing declining commissions (down 10 percent in Q4 2016 to $774 million) but record net revenue ($4 billion in Q4 2016), as asset-based fees slowly supplant commissions.

The publication offers a glimpse at the back and forth negotiation process behind the agreement, including information on different forms of the agreement. And Bloomberg points out that Morgan Stanley's disclosures say that the wirehouse "may choose not to offer" new ETFs from shops that don't pay.

Ben Johnson, director of global ETF research at Morningstar, and Eric Balchunas, an ETF analyst with Bloomberg Intelligence, both chimed in for the article. 

Edited by: Neil Anderson, Managing Editor


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