Welcome!

News Feed Item

TABB Says Brokers Face New Competitive Pressures from Buy-Side Firms Driving Change across US Equity Markets

New research from TABB Group says there is an air of cautious optimism as market conditions improve, commission wallets nudge higher, assets return and volumes stabilize. However, broker lists remain under pressure and the hunt for blocks of natural liquidity remains difficult.

According to TABB CEO and founder Larry Tabb, who wrote part two of the firm’s annual US institutional equity trading benchmark study, despite recent gloomy news, the immediate outlook for the broker community is more bullish than in recent years. “The TABB Equity Broker Index, monitoring whether we’re bullish or bearish on the US equity brokerage industry, looks strong, buoyed by rising assets under management and solid stock market performance. Still, that optimism is striped with caution.”

For the new study, “US Institutional Equity Trading 2014: Part 2 – Undercurrents of Change,” TABB Group spoke with 108 heads of trading at asset management firms across the US during Q4 2013. Interviews covered commission wallet; shifts in order allocation and rates; broker preferences; trading in the dark as well as trading with blocks and algorithms; and views on current market structure. It also explores the impact of buy-side initiatives, decisions and behavior on brokers, views on performance and coverage, and their outlook for 2014. Part one, “US Institutional Equity Trading 2014: Bellwethers of the Buy Side,” published earlier this year, focused on buy-side drivers and emerging trends amongst bellwether firms.

This year, says Tabb, participants nominated brokers that stand out as “best-in-class” across eight categories - market color, flow, risk, agency trading, algorithmic broker, execution consulting, analytics and market structure - independent from any commission or amount of order flow directed to that broker. “We wanted to compare perception of excellence with actual distribution of commission wallet, exploring the extent to which these services bring in incremental revenue, are prerequisite table stakes or shape the brokers’ products.”

According to Tabb, key points from the study include:

  • More than half of commissions go to the top 10 brokers.
  • An aggressive approach to funding commission-sharing agreement (CSA) / soft-dollar wallets has caused a steady increase in the commission rate associated with funding a CSA.
  • 80% of buy-side firms are positive or neutral about new broker coverage models.
  • Over 70% say that how they are covered impacts how they trade and brokers used.
  • Coverage models remain grounded in trust: nearly 60% say a sales trader should never see low-touch flow, that anonymity and control associated with trading algorithmically should remain sacrosanct.
  • 33% of the buy side has an initiative around data, including improving transaction-cost analysis (TCA) capabilities, harnessing internal data, understanding how orders route or expanding data consumed.
  • Views on integration remain divided and do not neatly fall into division by commission size, account type and strategy.
  • Buy-side tech projects that consolidate trading applications and build routers will change the way brokers can and must deliver services, rewarding those who partner closely with the buy side and use transparency and good governance to build trust.

The 29-page study with 34 exhibits can be downloaded by TABB Research Alliance Equity clients and qualified media at http://www.tabbgroup.com/Login.aspx. To purchase the study, write to [email protected].

About TABB Group

Based in New York and London, TABB Group is the research and consulting firm focused exclusively on capital markets, based on the interview-based, “first-person knowledge” research methodology developed by Larry Tabb.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
There will be new vendors providing applications, middleware, and connected devices to support the thriving IoT ecosystem. This essentially means that electronic device manufacturers will also be in the software business. Many will be new to building embedded software or robust software. This creates an increased importance on software quality, particularly within the Industrial Internet of Things where business-critical applications are becoming dependent on products controlled by software. Qua...
Big Data, cloud, analytics, contextual information, wearable tech, sensors, mobility, and WebRTC: together, these advances have created a perfect storm of technologies that are disrupting and transforming classic communications models and ecosystems. In his session at @ThingsExpo, Erik Perotti, Senior Manager of New Ventures on Plantronics’ Innovation team, provided an overview of this technological shift, including associated business and consumer communications impacts, and opportunities it ...
In his session at Cloud Expo, Robert Cohen, an economist and senior fellow at the Economic Strategy Institute, will provide economic scenarios that describe how the rapid adoption of software-defined everything including cloud services, SDDC and open networking will change GDP, industry growth, productivity and jobs. This session will also include a drill down for several industries such as finance, social media, cloud service providers and pharmaceuticals.
DevOps at Cloud Expo – being held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real results. Am...
"We host and fully manage cloud data services, whether we store, the data, move the data, or run analytics on the data," stated Kamal Shannak, Senior Development Manager, Cloud Data Services, IBM, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
IoT is rapidly changing the way enterprises are using data to improve business decision-making. In order to derive business value, organizations must unlock insights from the data gathered and then act on these. In their session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, and Peter Shashkin, Head of Development Department at EastBanc Technologies, discussed how one organization leveraged IoT, cloud technology and data analysis to improve customer experiences and effi...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develo...
SYS-CON Events announced today that MangoApps will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. MangoApps provides modern company intranets and team collaboration software, allowing workers to stay connected and productive from anywhere in the world and from any device.
The IETF draft standard for M2M certificates is a security solution specifically designed for the demanding needs of IoT/M2M applications. In his session at @ThingsExpo, Brian Romansky, VP of Strategic Technology at TrustPoint Innovation, explained how M2M certificates can efficiently enable confidentiality, integrity, and authenticity on highly constrained devices.
“delaPlex Software provides software outsourcing services. We have a hybrid model where we have onshore developers and project managers that we can place anywhere in the U.S. or in Europe,” explained Manish Sachdeva, CEO at delaPlex Software, in this SYS-CON.tv interview at @ThingsExpo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Predictive analytics tools monitor, report, and troubleshoot in order to make proactive decisions about the health, performance, and utilization of storage. Most enterprises combine cloud and on-premise storage, resulting in blended environments of physical, virtual, cloud, and other platforms, which justifies more sophisticated storage analytics. In his session at 18th Cloud Expo, Peter McCallum, Vice President of Datacenter Solutions at FalconStor, discussed using predictive analytics to mon...
Keeping pace with advancements in software delivery processes and tooling is taxing even for the most proficient organizations. Point tools, platforms, open source and the increasing adoption of private and public cloud services requires strong engineering rigor – all in the face of developer demands to use the tools of choice. As Agile has settled in as a mainstream practice, now DevOps has emerged as the next wave to improve software delivery speed and output. To make DevOps work, organization...
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discussed how businesses can gain an edge over competitors by empowering consumers to take control through IoT. He cited examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He also highlighted how IoT can revitalize and restore outdated business models, making them profitable ...