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Unfavorable economic conditions, escalating capital requirements, and stubbornly high costs continue to depress the performance of many investment banks. Their collective 6% ROE in 2015 capped off five years of dismal revenue results. Yet the same cannot be said for the capital markets industry as a whole—the ecosystem that includes buy-side firms, sell-side firms, information service providers, and exchanges.
In a commoditized industry such as financial markets, it has been critical for investment banks to control all aspects of the value chain—from origination to distribution to dealing—in order to maintain a competitive edge. Proprietary access to information placed the balance of power in their hands.
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