2012 Leaders in Japanese and Asian Equities and Equity Derivatives

A decline in institutional trading volumes in Asian equities has resulted in stiff competition among a tight group of brokers fighting for trading commissions across the region.  Meanwhile, Nomura maintained its dominance in the Japanese market across key aspects of the cash equities and derivatives business.

Asian Equities
According to the results of the Greenwich Associates 2012 Asian Equity Investors Study, institutional commission payments on trades of Asian cash equities declined 13% in the 12 months ended August 2012.“Not only are there fewer trading commissions available overall, institutions are likely to concentrate their trading business with their most important brokers in order to ensure their continued access to essential research and advisory services,” says Greenwich Associates consultant Jay Bennett.

Statistically tied at the top of the market for trading share are Credit Suisse, Morgan Stanley, UBS, CLSA Asia-Pacific Markets, Bank of America Merrill Lynch, and Deutsche Bank. These firms are the 2012 Greenwich Share Leaders in Asian Equity Trading Share.

Although Asia’s leading brokers are closely matched when it comes to trading commissions and research/advisory vote share in cash equities, their institutional clients indicate some differentiation among firms when it comes to the service quality provided. CLSA Asia-Pacific Markets earned a Greenwich Quality Leader designation in sales, trading, and research and analyst service quality, joined by Deutsche Bank in equity sales and research and analyst service quality, and joined by Citi, Credit Suisse and UBS in trading quality. Greenwich Quality Leaders are firms that receive quality ratings from institutional clients that top those awarded to competitors by a statistically significant margin.

Asian Equity Derivatives
While brokers have largely spared Asian cash equity businesses from the most painful cost cuts over the past 12 months, resource cuts at major banks will likely impact the competition for the equity derivatives business of Asian institutions in the year to come. “Staff reductions already implemented in 2012 and others scheduled for 2013 could well alter the competitive landscape in this market over the next 12 months,” says Greenwich Associates consultant John Feng.

Currently, the competition for institutional options trading market penetration is led by Deutsche Bank, Morgan Stanley, UBS, and Goldman Sachs, with Bank of America Merrill Lynch and Citi rounding out the top five including ties.

Japanese Equities
Nomura maintained its dominance in the market across key aspects of the cash equities and derivatives business covered by Greenwich Associates in its latest study with institutions based in Japan and Asia.

For the 12-month period ending Q3 2012, Nomura captured an estimated 13.7% share of institutional Japanese equity trading volume, trailed by second-ranked Daiwa Securities Capital Markets by nearly four percentage points. UBS, Bank of America Merrill Lynch, Morgan Stanley, Goldman Sachs, and Mitsubishi UFJ Securities round out the 2012 Greenwich Share Leaders in Japanese Equity Trading Share.

Nomura’s ability to maintain its leading position over the past year can be attributed in large part to the outstanding service quality it delivers to its institutional clients. Nomura is the 2012 Greenwich Quality Leader in Japanese Equity Sales and Japanese Equity Research & Analyst Service Quality, and shares the title of Greenwich Quality Leader in Japanese Equity Trading with Credit Suisse.

“The Greenwich Associates assessment of quality in equity trading encompasses both high-touch and low touch trading,” says John Feng. “The increasing importance of low-touch execution works to the favor of firms like Credit Suisse, whose electronic platform receives high quality ratings from institutional trading clients.”

Japanese Equity Derivatives
Although Japan’s institutional equity derivatives business is more competitive than that of cash equities at the very top of the market, here too, Nomura has maintained its strong position over the past year. With a market penetration score of 52%, Nomura leads the competition in options and volatility product market penetration, followed by Deutsche Bank, Goldman Sachs and Morgan Stanley. Nomura’s 53% market penetration score in futures and 65% in ETFs puts the firm clearly ahead of other firms comprising the Greenwich Share Leaders in those products. Nomura shares the Options & Volatility Product Coverage Quality designation with BNP Paribas and Deutsche Bank.