Careers

03:45 PM
Connect Directly
RSS
E-Mail
50%
50%

Minority- and Woman-Owned Broker Dealers Gaining Ground

More and more state and local pension funds are directing portions of their order flow to minority and woman-owned broker dealers. How are firms selected and what is important to consider when trading with these smaller shops?

Traders today have so much on their plates -- from fragmented markets to complex technology and algorithms. Now, for some, throw on top of that the requirement to trade through minority- and woman-owned broker-dealers. Public pension funds at both the state and local levels, as well as outside investment firms that service them, increasingly are being encouraged -- or required -- to trade certain percentages of their flow with minority- and woman-owned broker-dealers.

Directing business to minority- and woman-owned broker-dealers -- or emerging broker-dealers, as they sometimes are referred to by state and local programs -- is nothing new for municipalities. It dates back to the late 1970s when Atlanta Mayor Maynard Jackson encouraged the city to do more municipal bond business through these firms. But today the trend is reaching even further into state and local pension funds and asset managers.

California, New York, Illinois, Ohio and Texas are a few of the big states leading the push to direct trading flow to minority- and woman-owned broker-dealers. Sometimes this is achieved through legislated mandates; other times, it's simply "encouraged" behavior.

The State Universities Retirement System of Illinois (SURS), for example, requires that, subject to best execution, domestic equity investment managers direct 25 percent of total commission dollars to minority- and woman-owned broker-dealers. And the New York State and Local Retirement System reported that in fiscal year 2006, minority- and woman-owned brokerages received about 31 percent of its total paid commissions.

Historically, these practices were put in place to better mirror the constituents of the plans or pension funds for whom the money is being managed. Today, these minority- and woman-owned broker-dealers are executing growing volumes and competition is heating up among minority- and woman-owned broker-dealers for a bigger share of the trading pie. These firms are skilled, they have niches that distinguish them from their peers, and they are just as focused and expert on technology and execution as their bulge-bracket counterparts.

Associated sidebar: The City of New York Turns to Minority- and Woman-Owned Broker-Dealers

Previous
1 of 5
Next
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
lucifer2
50%
50%
lucifer2,
User Rank: Apprentice
1/30/2013 | 7:28:48 AM
re: Minority- and Woman-Owned Broker Dealers Gaining Ground


I
am interested in reading about more of the similar topics and would like to
have further information on the same subject. Hope to see the next blog soon.
Thanks.

California VA Broker
-
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - July 2014
In addition to regular audits, the SEC will start to scrutinize the cyber-security preparedness of market participants.
Video
Exclusive: Inside the GETCO Execution Services Trading Floor
Exclusive: Inside the GETCO Execution Services Trading Floor
Advanced Trading takes you on an exclusive tour of the New York trading floor of GETCO Execution Services, the solutions arm of GETCO.