Wells Fargo Exiting Research

It cites a preference for electronic trading among institutions.
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Wells Fargo

(WFC) - Get Report

said it will exit the institutional brokerage and research business, citing negative impacts from technological changes in the industry.

The bank said its subsidiary, Wells Fargo Securities LLC, will stop providing its sell-side institutional equity brokerage and research products and services immediately. It will continue to provide investment-banking advice and services, including mergers and acquisitions services, fairness opinions, debt and equity capital markets advice, private equity placements and retail syndication.

"Continuing to develop the institutional equity business does not make business sense for Wells Fargo because of the buy-side shift to electronic trading, the overall decline in commission rates, and because this business does not align with our middle-market and corporate customer focus," the company said.

"In this changing environment, despite outstanding effort by our team in this business, we're simply not able to earn the return on our investment that we need to grow this business."

Wells Fargo did not announce plans for any job cuts. It said it would work with employees affected by the decision to help them find work elsewhere in the company. Headquartered in San Francisco, Wells Fargo Securities also has trading and research operations in New York, Portland, Chicago and Boston.

Its shares gained 18 cents, or 0.3%, to $61.72 during regular trading hours.