While brokers have reported higher trading volumes this year than last, it is still their ability to access liquidity that sets them apart.
This was the attribute buy-side respondents to AsianInvestor’s trading and execution survey 2013 said they valued most from brokers (17.5%), followed by trustworthiness (11.6%), algos/DMA (9.5%), full service (9.3%) and idea generation/research (8.6%).
The majority of traders (65%) said they only changed counterparties occasionally, with the biggest reason to change cited as reliability (30.3%), followed by trader efficiency (24.8%) and access to market (20.9%).
One of the biggest votes of confidence from the buy-side community was given to CLSA, which was voted top in various categories including finding liquidity, trust, commitment to the business and best agency-only provider. It was also voted best firm for sales trading.
“We chose CLSA because of their simple business model,” says Stanley Luk, head of trading of Invesco in Hong Kong. “Unlike a broker/dealer, they do not expose clients to proprietary trading flow.
“It should mean they would get less liquidity than other investment banks that mix client flow with proprietary flow — but that hasn’t been the case. CLSA consistently shows very active flow, and they still are a full-service broker to many buy-side clients.”
Meanwhile, Morgan Stanley was voted best at providing indication of interest (IOI). UBS scored highly for best facilitation desk for single stocks, best service for block trades as well as swaps/synthetics. Macquarie was voted as having the best service overall in terms of futures and exchange-traded derivatives.
Competition in electronic trading was keen again this year. Credit Suisse scored some key wins and was voted best overall for e-trading. Traders said it also had the best access to dark liquidity, the most innovative algos and best at execution consulting.
A head trader in Singapore says he likes Credit Suisse’s insistence of having human intelligence and risk monitoring over their algos and dark pools.
“For electronic trading, it’s very easy for a service provider to just allow an order into the black box and leave it there for execution,” he notes.
“But Credit Suisse has been doing a good job in having manpower constantly monitoring the performance of algos and their internal crossing venue. They pro-actively alert clients if a particular strategy is not working for them.”
The firm also scored highly on portfolio trading. Credit Suisse claims up to a 60% market share in index events and rebalances since 2008, including for Hang Seng, FTSE China 25, MSCI Asia and FTSE Japan.
AsianInvestor conducted its survey between mid-August and early October. A total of 73 respondents from 64 firms participated, representing both long-only and hedge funds.
The majority of respondents are based in Hong Kong and Singapore. Others sent in responses from Japan, India, Australia, the US, the UAE and Europe.
Full results of the 2013 trading and execution survey will be published in the forthcoming November issue of AsianInvestor magazine.
AsianInvestor will announce its awards for trading and execution to online readers next week. These are based on quantitative data from our survey, combined with qualitative information from a pitching process and market feedback.