Associated feature: Minority- and Woman-Owned Broker Dealers Gaining Ground
The City of New York is preparing to announce an initiative to direct trading to minority- and woman-owned broker-dealers. Joseph Haslip, assistant comptroller for New York City Pension Funds, says the city already has put together a list of about 30 broker-dealers that are qualified and have shown that they have the ability to execute for the city.
According to Haslip, beginning in the first quarter of 2008, the city's pension fund managers will be asked to trade a certain percentage of trades, subject to best execution, with firms on the list. Haslip says they will be asked to trade 25 percent of domestic equities and 20 percent of international equities with minority- and woman-owned firms.
"We're not telling them you have to trade with this firm or that firm, but we are trying to get them to establish a relationship and then potentially trade," says Haslip. "We're mindful, though, that it's going to take some time to establish these relationships, and over the next couple of quarters we'll meet with the managers and help them along."
Haslip explains that while managers previously used to think that they couldn't get some trades, such as large block trades, done with the smaller shops, that is changing. "Brokers in this space are upgrading their capabilities, using algorithmic trading, and it allows them to handle larger volumes," he says.
The New York City program will extend beyond equities, with 30 percent of fixed-income trades directed to broker-dealers on the list, as well as 20 percent of corporates and 10 percent of mortgages, Haslip notes, adding that he expects the program will continue to expand into other asset classes and larger portions of trade volume in the future. Haslip says he also expects other plans to launch similar programs.
New York State also recently announced that it was issuing a new survey for trading partners interested in servicing its $154.5 billion New York State Common Retirement Fund. The announcement said that the state comptroller is "committed to providing opportunities to qualified minority- and women-owned brokers, and about one third of all trading is done through such brokers."