NEWS UPDATE
SELL-SIDE
Morgan Stanley tops US equities
broker league for commissions
Morgan Stanley came first for commissions, while the combined Virtu/ITG algos are
considered top by investment firms.
M
organ Stanley has come first
in a ranking of the top US
institutional equities brokers by
commissions, beating rivals JP
Morgan, Bank of America Merrill
Lynch and Goldman Sachs.
TABB Group drew up the league
table following a poll of 92 heads
of trading at buy-side firms earlier
this year to score brokers on various
categories, including commissions
allocation, algorithmic trading, high-
and low-touch coverage, execution
consulting, transaction analytics and
capital.
Morgan Stanley led the league
table in terms of commissions,
followed by JP Morgan, Bank of
America Merrill Lynch, Credit Suisse
and then Goldman Sachs for the top
five brokers list. Although Morgan
Stanley took the top spot, JP Morgan
led the commissions ranking for
servicing larger asset managers with
more than $150 billion in assets
under management.
“It’s critical for brokers to
understand where they sit in the
eyes of their clients, that the buy-
sides’ largest brokers receive by
far the largest percentage of flow.
The implications are far greater for
hedge funds as their top broker
tends to be their prime,” said Larry
Tabb, co-author of the report and
founder of TABB Group.
The survey also found that
although commissions are a critical
12 // TheTrade // Fall 2019
component in broker allocation,
asset managers ranked algorithms
as the main reason they allocate
flow to a broker. For algorithms,
the heads of trading ranked the
combined Virtu and ITG company
as top, but when Virtu and ITG
are considered separately, funds
agree that JP Morgan is the top
algo provider, followed by UBS and
Sanford Bernstein.
A separate report from TABB
Group published in August, said that
US commissions are plummeting
in light of a shift towards passive
investing, and the unbundling
of research and execution under
MiFID II. Despite MiFID II not
being directly enforced in the US,
larger institutions have opted to
separate research and execution
commissions, leading to a decline
in the US commission pool of 42%
since 2015, and 27% since 2017.