Integrity and locating liquidity remain the key considerations for long-only and hedge fund managers when it comes picking brokers, according to AsianInvestor's annual trading survey.
The poll posed qualitative and quantitative questions about how fund managers choose and compensate their broking partners. In part one, we considered the way respondents pick their brokers, how many partners they had and whether the amount paid to them was rising or falling. Managers also gave views on which brokers were the most impressive in terms of service.
Overall, UBS once again stood out as the best overall broker when it came to finding liquidity and being trustworthy (the voters’ most important requirements).
The Swiss bank beat Goldman Sachs into second place in these two categories, although the latter was viewed by hedge funds as the best broker for sourcing liquidity.
Elsewhere, Morgan Stanley was voted first among long-only funds for offering indications of interest, while its sales trading capabilities were deemed the best in Asia by hedge funds.
Bank of America Merrill Lynch enjoyed strong success with buy-side voters too. The bank was voted best for sales trading by long-only fund respondents. It also stood out from its peers for programme trading and overall market microstructure research, and was ranked top for electronic trading by both categories of voter.
Meanwhile, UBS was deemed the top broker for regulatory research. Tellingly, both sets of voters also considered the Swiss bank to be the best overall broker for offering access to local market liquidity; a key consideration for investors wanting to buy into Asia’s fragmented stock markets.
However, Hong Kong-based brokerage CLSA was seen as offering the best services and liquidity in Asia’s smallest markets – frontier countries. It was also seen as the best for microstructure research by hedge funds, a vote that underpins its research-led focus. Evidently the company’s relatively new owner, Citic Securities of China, has not greatly diminished its perceived capabilities with its pan-Asian customer base.
In addition, CLSA was named the top agency-only provider by long-only and hedge fund voters alike, winning out over players such as the dark pool-focused Liquidnet. However, the latter did enjoy success as our top-voted alternative trading venue.
Meanwhile, electronic trading-cum-news platform Bloomberg was seen by respondents as possessing both the best execution and order management systems, respectively.