SD-02.8 — Research Procurement & Evaluation

Business Domain: BD-02 Securities Research & Selection (Front office) · Applies: PUB

Purpose

Sources, budgets, pays for and evaluates the external research the firm consumes — sell-side, independent and expert-network research. Where SD-02.1 to SD-02.7 produce the firm’s own research, this Service Domain governs the research it buys. Since MiFID II unbundled research from execution, external research is explicitly priced, budgeted and paid for through a structured evaluation — making research procurement a discrete, regulated capability. It is near-universal: even firms with deep internal research consume external research, and a wealth manager running on curated external research depends on this Service Domain more than on any other in BD-02.

Service Operations

Set the research budget — determine the annual external-research spend and the research charge, and its basis in the investment-management agreement.
Source external research providers — identify and onboard sell-side, independent and expert-network research providers.
Operate the broker vote — run the periodic structured evaluation in which portfolio managers and analysts score and rank research providers.
Allocate research payments — translate the evaluation into provider payments and the commission allocation across the broker panel.
Administer the Research Payment Account — manage the client-funded or profit-and-loss-funded account research is paid from.
Evidence unbundling compliance — maintain the records demonstrating research is separately priced, budgeted and valued per the MiFID II regime.

Inputs and outputs

Inputs: external research output; portfolio-manager and analyst evaluation scores; the research budget; trading-commission data.
Outputs: the provider ranking, the research-payment allocation, the budget-versus-spend record and the compliance evidence — consumed by BD-06 Trading & Execution (through which the commission allocations settle), by BD-10 Investment Compliance (the MiFID II research-unbundling rule’s pre-trade obligations), by BD-14 SD-14.2 Corporate Compliance & Conduct (the conduct-compliance assessment of the firm’s research arrangements), and by BD-16 for governance reporting.

Entities

Consumes: Legal Entity (E-01) — research providers as a role of the party master.
Owns: none — the provider evaluation and the payment allocation are operating-model artefacts.

Standards

MiFID II research-unbundling rules — the separation of research from execution, the research budget and research charge, and the Research Payment Account. The broker vote (also provider or broker evaluation) is the industry-standard provider-evaluation methodology, which the regime requires to combine a defensible quantitative and qualitative basis.

Open extensions

The boundary with BD-06 Trading & Execution on commission settlement — SD-02.8 allocates; BD-06 settles.
Whether the external-research-provider evaluation warrants a record structure, parallel to a service-provider register.
Jurisdictional variation — the unbundling regime differs across markets; the Service Domain is written to the MiFID II form as the most demanding case.