Greenwich Associates Announces 2013 Share and Quality Leaders Brokers Stabilizing Amid Reduced Expectations
Financial service firms have adjusted their strategies and their business structures to better fit an era in which equity trading activity has plummeted, leading to a drop in institutional trading commissions and a painful contraction in brokerage revenues. The result has been reduction in the overall amount of capital devoted to the business by brokers, mergers, desk consolidation and headcount reductions.
In this challenging environment, UBS and Credit Suisse captured the largest trading shares in European equities while UBS and Deutsche Bank are effectively tied for the top spot in providing research/advisory services.
“Many institutional investors have had to endure disruptions in their sell-side coverage as a result of this process,” says Greenwich Associates consultant John Colon. “Turnover represents a particular issue for investors. Many old and trusted relationships have been displaced due to sell-side cost reductions, and many trusted equity professionals have been replaced by younger, less experienced analysts, research sales professionals, and sales traders.”
Greenwich Share Leaders
Brokers that best maintained their levels of coverage and minimized turnover and other service issues largely managed to hold their ground. UBS and Credit Suisse tied for the top spot in European equity trading volume with trading shares of 9.6-10.5%. Tying for the runner-up position were Bank of America Merrill Lynch, Morgan Stanley and Deutsche Bank, all with trading shares between 8.5% and 8.9%. In European equity research/advisory vote, UBS and Deutsche Bank tie for the top spot with vote shares of 9.1-9.3%, followed by Bank of America Merrill Lynch at 8.1% and a tie between Morgan Stanley and J.P. Morgan with vote shares between 7.0% and 7.1%. These firms are the 2013 Greenwich Share Leaders in European Equity Trading and European Equity Research/Advisory.
The trading performance of both UBS and Credit Suisse can be attributed in part to their strength in algorithmic and/or smart-order routing trades. UBS ranks first in those trades with a market penetration of 65% of institutional investors, followed by Credit Suisse at 60%. Behind these firms are Morgan Stanley, with a market penetration of 46%, Deutsche Bank at 38% and Bank of America Merrill Lynch at 35%. The market positions of UBS and Credit Suisse also get a lift from their strength in portfolio trading, where UBS ranks first with a penetration score of 52%, followed by Credit Suisse at 48% and Morgan Stanley at 44%. Behind these firms are Deutsche Bank and J.P. Morgan jointly at 37%. These firms are the 2013 Greenwich Share Leaders in European Equity Algorithmic Trading, and European Equity Portfolio Trading.
Greenwich Quality Leaders
Greenwich Quality Leaders are firms whose institutional clients award with quality ratings that top those of competitors by a statistically significant margin. “Perceptions of quality take on added importance at a time of industry retrenchment and the resulting disruptions,” says Greenwich Associates consultant Jay Bennett.
The 2013 Greenwich Quality Leader in European Equity Trading is UBS. Morgan Stanley and UBS share the title of 2013 Greenwich Quality Leaders in European Equity Research and Analyst Service. UBS takes the title of 2013 Greenwich Quality Leader in Electronic Trading, and the 2013 Greenwich Quality Leaders in Portfolio Trading are UBS, J.P. Morgan and Credit Suisse. The 2013 Greenwich Quality Leaders in European Equity Sales are UBS, Deutsche Bank and Exane BNP Paribas.