Ticonderoga Surrenders

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Ticonderoga Securities, an agency broker which had absorbed research staff from Soleil Securities and Pali Capital, will be shutting down this week.  The firm’s failure underscores the pressure on all cash equity participants brought on by low commission volumes.

Ticonderoga Securities launched in 2009 and took on former Pali Capital traders and research staff in 2010.   The firm merged with Soleil Securities in May 2011, adding to its research and trading staff.

According to Traders Magazine, the Soleil deal never delivered the business that Ticonderoga had hoped.  Much of Soleil’s business was reportedly paid with a check through commission sharing arrangements, not helping Ticonderoga’s trading desk.

Ticonderoga had listed 14 research analysts covering 12 sectors on its website prior to closing.  The firm also had a distribution arrangement with Shenyin Wanguo Securities (H.K.), a Chinese securities firm, to distribute research on 350 Chinese A & B listed companies and 150 Hong Kong listed H Share companies.

Ticonderoga’s demise highlights the difficult environment facing all equity research participants.  Equity trading volumes are down prompting asset managers to reduce their research payments and shift more payments through CSAs to stretch commission dollars further.

The pain is particularly acute among agency brokers.  WJB Capital, which distributed third party research, shut down earlier this month.  Susquehanna Financial Group, with research coverage of around 300 stocks, fired 15% of its cash equities staff, roughly 30 people earlier this month.

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