Most investors understand that commission rates on equity trades vary from country to country and from developed to emerging markets, but new research from Greenwich Associates reveals that rates also vary to a huge extent from investor to investor within markets.

To meet institutional investors’ need for reliable information on equity commission rates for use in best execution/compliance efforts and as a means of evaluating and lowering their own overall trading costs, Greenwich Associates recently launched its inaugural Comprehensive Commission Rate Study.

The results of this study are summarized in a report, Equity Trade Commissions: Rate Vary Broadly Across and Within Markets, and show that bundled rates (including research and execution) range from 14-15 basis points in developed market to over 25 bps in emerging markets. Within these broad ranges, however, Greenwich Associates found wide variations at the individual account level based on the diversity of investment strategies pursued by institutions (active, passive, mixed), variations in their level of reliance on outside research, and practice differences in funding research budgets.

For example, even in a highly developed market such as the United Kingdom, reported bundled rates range from a minimum of 6 bps to a maximum of 22.5 bps, and rates for high-touch execution range from only 2.6 bps to 15.0 bps. High-touch “tack-ons” range from 2.0 bps to 15.5 bps.

“One of the study’s most interesting findings was that large institutions don’t report meaningful discounts,” says Greenwich Associates consultant John Colon. “Surprisingly, commission rates paid by institutions classified as Greenwich Associates “Large Accounts” don’t differ meaningfully from overall averages.”

Comprehensive Commission Rate Study
For each of the 45 country markets, the Greenwich Associates Comprehensive Commission Rate Study presents benchmark data for High-Touch and Single-Stock Agency Trades (Bundled, Execution-Only and Tack-On Rates), Electronic/Algorithmic Trades (Execution-Only Rate, Tack-On Rate) and All-In Blended Rates.