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Leon’s Musings – talk of the town – boutiques – commission sharing agreements

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Talk of the town

Late last year the talk of the town seemed to be what a difficult market it was for stockbrokers and like we are seeing in the very public carving up of RBS, things haven’t changed but in the last few days more and more people are talking about how tough it is for fund managers. I was talking with one fund manager yesterday who is doing reasonably well and even they are feeling pressure from clients to reduce fees – I guess all of this is just a part of the whole finance ecosystem adjusting to new realities.

Boutiques

Amongst the fund managers it seems boutiques are really feeling the heat at present. Last year we had the closure of Ankura and I have heard of a few more that have or are planning to shut up shop. Some old hands have decided that they have just had enough with all the pressures and pulled the plug and have been able to do so because they have the financial wherewithal but for the young boutiques they don’t have that luxury and have to soldier on and let’s hope they can weather the market.

Commission sharing agreements

In Australia up until now we haven’t heard too much about CSA (commission sharing agreements) but one fund manager I spoke to thinks that we they will become much more prevalent given the market integrity rules and best execution. One interesting comment he made was that he expects a few brokers to abandon execution and become reasearch only houses which may not be a bad model given that execution is a race to zero and comes with ancillary costs such as settlement and clearing.


Filed under: best execution, equities, fund managers, Leon's Musings, markets, regulators, research, stockbroking Tagged: Ankura@, Australia, RBS@

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