The terms "independent research" and "alternative research" are used broadly interchangeably, to mean research that is not produced by an investment bank or broker, and is therefore less at risk from motivation of winning additional business/mandates, or subject to subsidy from other business areas. However, someone has to fund the costs of conducting the research, and when the funder is the company being researched, this form of independent research is termed "sponsored" or "company-paid" research. This form of research is open to criticism for a real or perceived lack of objectivity in the research and its conclusions, which in turn reduces its value to investors and hence to the companies themselves.

Intermediated Research builds upon the sponsored research model, but adds important layers of safeguards into the commercial and research process framework. These safeguards can go so far as to include:

  •  No research provider may have any investment banking, brokerage or proprietary asset management operations in their business models

  •  the company has no choice in its allocation to a research provider;

  •  once matched with the research provider, the company is under a multi-year contract;

  •  the fees paid to the research provider are not sufficiently material for the company to be able to exert any influence over the content or conclusions of the research report

  •  fees are paid to the intermediator rather than to the research firm directly.

  •  the company contracts with the intermediator rather than the research firm.

  •  the intermediator can act as arbitrator in the case of disputes.

  •  the intermediator is a respected participant in the market.

  •  the research service is based upon a standard template for analysis of every company so that all standard topics are covered

  •  the research service avoids ratings and target prices in the reports, since these can risk becoming a focus of pressure exerted on the research provider by the subject company.

Although it is not a core feature of intermediated research, a further characteristic of a successful intermediated research service is that it must be provided at a price point that makes it affordable for the target market - those companies that suffer from absent research, generally smaller quoted companies.

Collectively, these measures enhance the value of the report to investors and consequently, to the company itself. A good example is PSQ Analytics (www.psqanalytics.com) which was launched with the support of London Stock Exchange in March 2009 by IIR, Argus Research and Pipal Research and embraces many of the most significant protections of Intermediated Research.