For the City’s smaller brokers and research houses, there’s good news and there’s bad news. The good news for deal-starved brokers is that a wave of mergers and acquisitions is looming. The bad news is that they themselves are the targets.

New European rules that have forced investors to pay separately for research and share trades have triggered a sharp fall in research spending. Brokers are also suffering from the continued squeeze on trading commissions and a dearth of UK corporate deals. For some the answer may be finding a well-heeled new parent.