Buy-side traders, facing lower volatility and volumes, say that the number of agency brokers will decrease over the next year, according to comments released by Bloomberg Tradebook, a global agency broker. Buy-side executives agreed that the most important factors in selecting an agency broker are independent research, trade ideas and educational forums that keep them abreast of the latest issues, trends and innovative technology solutions. Another key factor cited was sales trading desk support, but liquidity and flow were of much less importance in selecting an agency broker, the group noted.
“Buy-side traders are under intense pressure in the marketplace and expect their agency brokers to add value to the trade, give them high-quality market intelligence and provide innovative technology R&D to help maximize their performance,” said Ray Tierney, President and CEO of Bloomberg Tradebook. When asked what kind of support they want most from their broker dealers, the group said color on stocks and the market, followed by a trading desk to work orders and evaluations of the effectiveness of potential tools and algorithms.
Buy-side executives at the forum also said that their future success depends on access to better algorithms, better workflow integration and better insight and education. In regards to pre-and-post trading tools, the group noted that they rely on transaction costs analysis (TCA) in real-time and end-of-day (EOD) reports for additional transparency.