The disappearance on three big Wall Street firms in 2008 has given a boost in market share to U.S. equity analysts at smaller firms, but the so-called “bulge bracket” firms have captured their fair share of that business, too.

New research from Greenwich Associates finds that bulge bracket firms have seen their combined share of “research vote” — measured by a survey of buy-side institutions, weighted by the amount of U.S. equity trade commissions the institution pays out — decline since 2008, when Bear Stearns, Lehman Brothers and Merrill Lynch were swallowed up by rival firms.

Back in 2008, the big firms captured 73.1% of the research vote in U.S. equities. In 2009, that was down to 68.5%, and in 2010 it dropped to 64.1%, Greenwich says. Meanwhile, the share for mid-sized broker-dealers, regional firms and sector specialists increased from 23.9% in 2008 to 28.9% in 2009 and to 32.4% in 2010, it reports; and, after remaining flat at 2.7% from 2008 to 2009, the vote captured by independent research providers increased to 3.4% this year.

Greenwich says that this shift of research vote from the bulge bracket to smaller firms mirrors a similar pattern followed by some of the top analysts on the sell-side. “Many of these displaced analysts found new employment with smaller broker-dealers, regional competitors, sector specialists and independent providers, with the last group including several high profile start-ups,” says Greenwich Associates consultant, Jay Bennett.

Nevertheless, despite these notable shifts, Greenwich points out that the aggregate amount of research share flowing from the bulge bracket to other research providers since 2008 falls far short of the total share previously held by Bear Stearns, Bank of America, Merrill Lynch and Lehman Brothers, “indicating that bulge bracket brokers have succeeded in retaining or capturing some of the freed-up business.”

It notes that Barclays Capital has been especially effective in holding onto the vast majority of the relationships and research share formerly held by Lehman Brothers, the core U.S. assets of which were acquired by Barclays.

Indeed, Greenwich ranks Barclays third overall in equity research share, tied with Credit Suisse. JP Morgan (which swallowed Bear Stearns) ranks first, and Bank of America Merrill Lynch sits second. And, only 60 basis points in share separates the jointly fourth-ranked firms Citi, Goldman Sachs, Morgan Stanley, Sanford C. Bernstein, and UBS (listed in alphabetical order).

Greenwich says that it also remains unclear whether the shift in research share away from the bulge bracket will prove sustainable over the long term.

“In trying to compete with industry giants, smaller research providers face structural factors that work to the advantage of their bigger rivals. Clients have an incentive to work with bulge bracket providers in research as a means of building strong relationships and benefiting from these firms’ provision of liquidity via capital commitment access to deal flow and direct access to corporate management teams,” it notes.

Additionally, it points out that much of the bulge bracket’s loss of share over the past two years was the result of structural issues at the corporate level, as opposed to problems within the equity functions and research franchises of these firms themselves.

“Now that the crisis has at least temporarily receded, several U.S. bulge bracket firms have begun rebuilding depleted research franchises and hiring back top analysts. They are joined in this effort by foreign firms like Nomura, CLSA and Macquarie, which aspire to commit significant resources to the U.S. equity research market,” it says.

IE