Keefe Joins Unbundling Push

Updated from 12:22 p.m.

The push to make Wall Street firms charge separately for research reports and executing trades continues to inch along.

Keefe Bruyette & Woods says it's allowing big institutional customers to pay separately for stock research and trading commissions. The investment banking boutique disclosed the so-called unbundling arrangement in the registration statement for its planned IPO.

The New York-based firm says it is "a party to several of these unbundling arrangements, and may enter into additional unbundling arrangements in the future." Keefe Bruyette says it made the disclosure in this past spring's IPO filing as well as in a recent update. It did not disclose the institutions it has entered into unbundling pacts with.

The push toward unbundling research fees from trading commission has been driven by some in the mutual fund industry, in particular Fidelity, the nation's largest mutual fund family. To date, Fidelity is the only mutual fund company to publicly acknowledge it has asked Wall Street firms to unbundle research from trading commissions.

But a number of other fund families have believed to have done the same.

Some big institutional investors favor unbundling as a potential cost-cutting move. Wall Street firms traditionally have forced big customers to pay a single fee for both executing trades and buying research -- even if the customer didn't want the research.

Wall Street has been reticent about acknowledging these unbundling arrangements. To date, the firms that have disclosed entering into unbundling arrangements with their customers include Lehman Brothers(LEH Quote), Deutsche Bank(DB Quote), Cowen(COWN Quote) and Thomas Weisel(TWPG Quote).

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