The City of London's vanishing analysts

Buried in my loft, alongside decades-old reporter's notebooks, is a collection of volumes each about the size of a copy of Vanity Fair — albeit not as glossy — containing lists of brokers' analysts.

Beside individual names, listed by the sectors they covered, are my handwritten notes —  the analyst's (or their market maker's) direct phone number, plus observations on the individual, such as "chatty" or "won't talk to reporters."

These were essential tools of the trade for financial journalists in the 1990s, writing either on individual companies or stock market reports.

The brochures were distributed at the annual Extel awards, a survey of fund managers anointing the analysts deemed best in their field, announced at a lunch at the Guildhall. It was obligatory to call them "The City's Oscars."

I first attended 30 years ago, when Extel was owned by Pearson, the then-publisher of the Financial Times. The guest speaker was the late and much-missed Alistair Darling, then the Labour Party's City spokesman who later became chancellor (or finance minister).

The surveys are now big business. Extel's coverage includes sales teams, trading teams, brokers, analysts, fund managers and investor relations teams across all geographies and asset classes.

The lunchtime event is long gone, replaced in 2021 by a black-tie dinner for which participants will have to wait until September, but the latest pan-European awards were published yesterday.

From a domestic perspective, most interesting were rankings for the 2026 U.K. Small & Mid-Cap (SMID) brokers' rankings, a sector that has suffered severe attrition.

That stems from the introduction in January 2018 of the second version of the Markets in Financial Instruments Directive (or MIFID II), an EU directive seeking to r[104898984]aise investor protection and market transparency.

It forced brokers to charge separately for the research published by their analysts, the cost of which was previously "bundled" with broking commissions.

Its impact was particularly felt in the small and mid-cap segment of the U.K. equity market.

David Enticknap, CEO of Extel, observes: "MIFID II dealt equity research not a fatal, but certainly a painful, blow."

That can be seen in analyst numbers. In 2007, as the financial crisis began, there were 29 small and mid-cap retail analysts; now there are just 17. The number of support services analysts has similarly fallen from 26 to 20.

Alongside stalwart names still around like Investec, Peel Hunt and Shore Capital, the 2007 rankings include long-gone names like Bridgewell Securities, Oriel Securities, Cenkos Securities and Seymour Pierce.

Meanwhile, consolidation has continued in recent years, with Numis Securities being acquired by Deutsche Bank in 2023, Panmure Gordon merging with Liberum in 2024 and Stifel closing its U.K. equities business at the end of 2025.

Sector coverage has fallen too: in 2007, there were 18 individual sectors in the U.K. SMID survey, but yesterday's rankings were across just nine, with sectors like Chemicals, Metals & Mining and Transport & Logistics all gone.

However, following the Investment Research Review in 2023 by Rachel Kent, a partner at the law firm Hogan Lovells, the Financial Conduct Authority has softened the rules — allowing asset managers to bundle some payments for research and trade execution once more.

Accordingly, Extel's Enticknap detects signs of recovery: "The seeds are there. But research has to be valued. The buy side has to value it. If there's research, liquidity will follow."

"And we need to see young blood in the business," he added.

Back in 1996, Darling observed, correctly, that a good ranking in the Extel survey could add thousands to an analyst's salary.

With young graduates these days pursuing fortunes in tech, rather than the City, enticing them back may prove difficult. But persuading them that being a broker's analyst remains a noble calling will be vital if the London market is ever to revive.

— Ian King

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