J.P. Morgan Leads in U.S. Equity Trading; Tier 2 Firms Gain Share
The bulge bracket trading firms continue to dominate U.S. equity trading volume amid a growing field of Tier 2 brokers who have been able to serve clients the major firms have shunned.
In its latest survey, Greenwich Associates has announced the market share leaders in U.S. cash equities trading and the results are similar to last year’s — the top tier bulge firms like J.P. Morgan, Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley all placed in the top 5. The strong showing comes amid yet another year of modest commission growth, a slowdown in institutional trading and regulatory change.
“Depressed trading volumes have been a drag on revenues and earnings of all the global banks,” said Greenwich Associates managing director Jay Bennett. But despite that backdrop, top trading share remained the bastion of the big firms.
In U.S. Equities Trading Share, the 2016 Greenwich Leaders tied at the top of the market are J.P. Morgan, Goldman Sachs, Bank of America Merrill Lynch, and Morgan Stanley, all with trading shares between 7.8%–8.3%. Credit Suisse rounds out the top five with a trading share of 7.0%.
When it comes to electronic or algorithmic trading, the top spots remain filled by the bulge firms but after that the second level or tier 2 trading firms. According to Greenwich data, electronic or “low-touch” electronic trades make up about 55% of U.S. equity trading volume for larger accounts and about 27% of the annual commission pool.
Goldman Sachs and Credit Suisse share the No. 1 spot as leading brokers in electronic trading with algo commission weighted trading shares of 9.2–9.3%, separated only by statistical error. Bank of America and J.P. Morgan are next with statistically tied shares of 7.6–8.3%, followed by Morgan Stanley with a share of 7.2%. Then in the sixth spot, Sanford C. Bernstein placed with a 7.0% share.
“In the resulting fierce competition for trading business, a “two-tier top-tier” profile exists, with the first tier doing 32% of the business and the second tier about 28%,” Bennett said. Other so-called second tier brokers that have been emerging in trading share are Jefferies and Weeden & Co.
Away from trading in the research and advisory category, again J.P. Morgan is in the top spot with a 10.1% share of the commission weighted institutional investor research/advisory vote, just ahead of Goldman Sachs at 9.5%. Greenwich reported that Morgan Stanley and Bank of America Merrill Lynch were in the third spot, statistically tied at 8.1%–8.6%, and Credit Suisse and Barclays, which are tied at 6.2%–6.4% rounded out the top five.
More on Brokers and Trading
Algorithms have become more prevalent in the spot FX market.
QB’s Algo Suite for futures market trade execution is also being co-located to HKEX.
Breaking data silos is key to deploying automation beyond 'nuisance' orders.
They can be used on quantum hardware expected to be available in 5 to 10 years.
Streaming blocks change the basis of matching and price discovery so institutions can find new liquidity.