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
Vulnerability management is vital for large companies that need to secure containers across thousands of hosts, but many struggle to understand how exposed they are when they discover a new high security vulnerability. In his session at 21st Cloud Expo, John Morello, CTO of Twistlock, addressed this pressing concern by introducing the concept of the “Vulnerability Risk Tree API,” which brings all the data together in a simple REST endpoint, allowing companies to easily grasp the severity of the ...
Cloud-enabled transformation has evolved from cost saving measure to business innovation strategy -- one that combines the cloud with cognitive capabilities to drive market disruption. Learn how you can achieve the insight and agility you need to gain a competitive advantage. Industry-acclaimed CTO and cloud expert, Shankar Kalyana presents. Only the most exceptional IBMers are appointed with the rare distinction of IBM Fellow, the highest technical honor in the company. Shankar has also receive...
Michael Maximilien, better known as max or Dr. Max, is a computer scientist with IBM. At IBM Research Triangle Park, he was a principal engineer for the worldwide industry point-of-sale standard: JavaPOS. At IBM Research, some highlights include pioneering research on semantic Web services, mashups, and cloud computing, and platform-as-a-service. He joined the IBM Cloud Labs in 2014 and works closely with Pivotal Inc., to help make the Cloud Found the best PaaS.
We all know that end users experience the Internet primarily with mobile devices. From an app development perspective, we know that successfully responding to the needs of mobile customers depends on rapid DevOps – failing fast, in short, until the right solution evolves in your customers' relationship to your business. Whether you’re decomposing an SOA monolith, or developing a new application cloud natively, it’s not a question of using microservices – not doing so will be a path to eventual b...
We all know that end users experience the internet primarily with mobile devices. From an app development perspective, we know that successfully responding to the needs of mobile customers depends on rapid DevOps – failing fast, in short, until the right solution evolves in your customers' relationship to your business. Whether you’re decomposing an SOA monolith, or developing a new application cloud natively, it’s not a question of using microservices - not doing so will be a path to eventual ...
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
We all know that end users experience the internet primarily with mobile devices. From an app development perspective, we know that successfully responding to the needs of mobile customers depends on rapid DevOps – failing fast, in short, until the right solution evolves in your customers' relationship to your business. Whether you’re decomposing an SOA monolith, or developing a new application cloud natively, it’s not a question of using microservices - not doing so will be a path to eventual ...
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
All organizations that did not originate this moment have a pre-existing culture as well as legacy technology and processes that can be more or less amenable to DevOps implementation. That organizational culture is influenced by the personalities and management styles of Executive Management, the wider culture in which the organization is situated, and the personalities of key team members at all levels of the organization. This culture and entrenched interests usually throw a wrench in the work...
DXWorldEXPO LLC announced today that All in Mobile, a mobile app development company from Poland, will exhibit at the 22nd International CloudEXPO | DXWorldEXPO. All In Mobile is a mobile app development company from Poland. Since 2014, they maintain passion for developing mobile applications for enterprises and startups worldwide.
Sanjeev Sharma Joins November 11-13, 2018 @DevOpsSummit at @CloudEXPO New York Faculty. Sanjeev Sharma is an internationally known DevOps and Cloud Transformation thought leader, technology executive, and author. Sanjeev's industry experience includes tenures as CTO, Technical Sales leader, and Cloud Architect leader. As an IBM Distinguished Engineer, Sanjeev is recognized at the highest levels of IBM's core of technical leaders.
DXWorldEXPO LLC announced today that ICC-USA, a computer systems integrator and server manufacturing company focused on developing products and product appliances, will exhibit at the 22nd International CloudEXPO | DXWorldEXPO. DXWordEXPO New York 2018, colocated with CloudEXPO New York 2018 will be held November 11-13, 2018, in New York City. ICC is a computer systems integrator and server manufacturing company focused on developing products and product appliances to meet a wide range of ...
We are seeing a major migration of enterprises applications to the cloud. As cloud and business use of real time applications accelerate, legacy networks are no longer able to architecturally support cloud adoption and deliver the performance and security required by highly distributed enterprises. These outdated solutions have become more costly and complicated to implement, install, manage, and maintain.SD-WAN offers unlimited capabilities for accessing the benefits of the cloud and Internet. ...
As Cybric's Chief Technology Officer, Mike D. Kail is responsible for the strategic vision and technical direction of the platform. Prior to founding Cybric, Mike was Yahoo's CIO and SVP of Infrastructure, where he led the IT and Data Center functions for the company. He has more than 24 years of IT Operations experience with a focus on highly-scalable architectures.
Headquartered in Plainsboro, NJ, Synametrics Technologies has provided IT professionals and computer systems developers since 1997. Based on the success of their initial product offerings (WinSQL and DeltaCopy), the company continues to create and hone innovative products that help its customers get more from their computer applications, databases and infrastructure. To date, over one million users around the world have chosen Synametrics solutions to help power their accelerated business or per...