What drives the trading desk decisions? According to 75% of fixed-income traders and sales professionals interviewed who work in US and European banks and regional brokers, the relationship is king.
“People on the sell-side will need to educate people on the buy-side in how to route trades and how to make the best use of all the venues available,” says Johnson. “Are you going to use a dark pool? Which systematic internalizer is best for this...
According to Greenwich Associates real-money investors and corp treasuries value best execution and price when it comes to choosing a dealer.
“In some ways electronic trading is the next best option to how they did things in the old days,” McPartland said. “They still might not love it, but they’re accepting it as it is and taking it at face value.”
Bank of America Corp., Barclays Plc and Goldman Sachs Group Inc. were most frequently cited as trading partners for Strips by institutional investors surveyed this year by Greenwich Associates, said James Borger.
According to a report out by Greenwich Associates, the market intelligence provider, the US equity brokerage business has declined by about 40% since 2008.
Total U.S. institutional equity commissions have fallen 40% from the first quarter of 2009 to March 31 of this year, the result of less stock turnover after the financial crisis, according to Greenwich Associates.
“Just as it is important for the sell side to have profitable relationships with their counterparts, it is important for investment managers to have meaningful relationships with their brokers,” said Richard Johnson.
In their 2016 U.S. Bond ETF Study Greenwich Associates noted that 71% of surveyed institutional investors have found that the trading, sourcing and liquidity of fixed income securities have become more challenging over the last three years.
Globally, Greenwich Associates forecasts actively managed assets to rise to $64 trillion in 2020 from $56 trillion in 2015 — a gain of 14.3%, with a compound annual growth rate of 2.7%.
