Pity the Wall Street analyst.



The ranks of investment-bank research analysts have been shrinking for years amid new regulations and subdued trading markets. Now European rules that unbundle research and trade execution has resulted in clients spending about 25 percent less on reports compared with a year earlier, according to Daniel Pinto, JP Morgan Chase co-president.



Asset managers and hedge funds are likely to continue penny pinching when it comes to research, Pinto said Tuesday at a conference in New York. Previously, clients paid for research by funneling trade commissions to banks. That changed when European regulators rolled out the Markets in Financial Instruments Directive, or MiFID II, in January, forcing clients to pay for research and trades separately.



"Now that everyone is seeing what they are consuming, what they aren't, and the value of it, there will probably be another shrinkage of consumption'' beyond the 25 percent that has already happened, Pinto, 55, said Tuesday in a conference in New York. ``I think there will be one more leg down.''



Speaking about the industry, he added: "The millions of pages we write about many things, it may not be what clients are willing to pay for."



There is a silver lining at investment banks, but it's for traders, not research analysts who write reports and offer recommendations on stocks. While firms make less money from research, the biggest banks with the latest technology will get a larger share of trade orders, Pinto said. "There is some evidence of that happening already," he said.



"Great analysts will always be valuable," Pinto said, adding that he hasn't reduced head count in his research department yet because he wants to see several more quarters of client behavior before making cuts.



An unexpected change resulting from the rules is that clients are more likely to attend — and pay for — in-person events such as conferences, where it's possible to get analysts' views in person rather than paying for the research.



Clients are heading to "environments where they can see a lot of it at one time, so the conferences are being better attended than they were before," Pinto said.