Abel/Noser Solutions (ANS) has released its annual Global Broker Performance Study, which ranks global brokerage firms on their ability to demonstrate best execution for clients and includes a breakdown of the top brokers in the North American, European and Asian Pacific regions.
For the second year in a row, Liquidnet edged out traditional firms in both the global and North American rankings, with Morgan Stanley coming in second. Crédit Agricole and Macquaire Securities lead the European and Asia-Pacific rankings.
The study evaluates brokers using placement strike price results that reflect the moment when the broker first received instructions from the buy-side trader. ANS measured brokers on placement strike price summary results for the largest brokers in each region. Brokers’ performance was evaluated against their “trade-level” benchmarks to assess which brokers executed best when accounting for market conditions. To calculate trade-level benchmarks, ANS leveraged its proprietary universe of measured trades, consisting of over USD7.5trn in trading from over 500 institutions globally.
“As the brokerage industry continues to consolidate, brokers are pursuing a variety of different strategies to pursue today’s lower aggregate volume. We’ve seen some brokers do quite well this year by pursuing a slower, more holistic approach to trading or focus on crossing large blocks. Liquidnet is a good example,” says Ted Morgan, chief operating officer, ANS. “The pursuit of speed for its own sake does not appear to be the most important component of best execution. We’ve also seen brokers who offer consistently good results grow in market share.”
This study only includes brokers who traded in more than one region. The largest broker in the survey executed trades valued in excess of USD250bn, while the smallest executed over USD80bn.
“Global equity brokers engage in a fierce competition for the billions of dollars of commissions at stake— commissions which impact investors’ performance and contribute to brokers’ profits,” says Morgan. “ANS’ study reveals the ‘30,000-foot view’ of global brokerage performance, underscoring our commitment to help clients evaluate their own broker trade cost analysis results.”