Agency Brokers Dominate Commission Survey


We released a new Integrity ResearchFocus® report today on Commission Sharing Arrangements (CSA) which showed a remarkable swing from our previous study released in January 2009.  In the current study, agency brokers dominated the commission management responses from 214 buy side firms surveyed in the first quarter of 2010.  In the previous study, based on a survey in the fourth quarter of 2008, all nine of the Integrity Top Picks were full service investment banks.

Agency brokers clearly benefited from the recent financial crisis as execution counterparties, and this carried over into commission management.  The challenge now will be for them to retain this market share as the bulge brackets come back, and one important battlefield will be research.  You can count on us to keep you informed on how the battle fares.  In the meantime, here is the press release for our new CSA study.

New York, NY (PRWEB) August 18, 2010 – Agency brokers garnered 9 of the top 15 positions in Integrity Research Associates latest survey of users of commission management services, conducted in the first quarter of 2010. Full service investment banks, which were the first to promote the benefits of Commission Sharing Arrangements (CSAs), received the remaining 6 spots.

“Execution only brokers gained share during the financial crisis, and commission management was no exception,” commented Michael Mayhew, Chairman of Integrity Research and co-author of the study. “The challenge will be to preserve their recently won market share as the bulge firms rebound.”

The survey, conducted during the first quarter of 2010, polled users of commission management services from 214 investment firms, including hedge funds, mutual fund groups and pension funds. A key component of commission management offerings are CSAs, which allow investors to consolidate trading with best execution counter-parties while directing commission payments to other sources of investment research.

The majority of respondents (52%) expect more unbundling of commissions between execution and research over the next twelve to twenty-four months. Traditionally, investment managers paid for proprietary investment banking research with bundled commissions, typically averaging between $.04 and $.05.
Increasingly, investors are using CSAs to reduce their commission payments, opting for ‘cost plus’, which adds a research component to the base execution rate, yielding a rate in the $.02 to $.03 range.

“A side benefit of CSAs is increased transparency for what is being spent for execution versus research,” said Ana Blanco, analyst and co-author of the study. “As CSA adoption grows, investors are placing greater emphasis on proactively managing their spending on research.”

CSAs have gained in popularity over the last five years, and now account for 30% of research commission payments on average among respondents to the survey. The average equity commissions paid by survey participants was $26.2 million.

Respondents typically use 5 CSA providers, although some large investment firms use 12 or more. On average, 25% of commissions directed through CSAs are allocated to independent research providers that are not affiliated with investment banks.

The top three factors for choosing CSA providers, other than execution quality, are customer support/service, back office quality/trade reconciliation, and counterparty risk/financial strength.

The 99-page Integrity ResearchFocus® report details the survey findings including CSA/CCA usage patterns, comparative analysis and ratings of the seventeen most prevalent CSA providers, and Integrity Research’s 2010 Top Picks for Overall CSA Provider, North America, Global, Europe, and Asia. The report includes profiles on the top 20 CSA providers included in the study. The report is used as a “buyers guide” for investment professionals and other users of commission management services. For additional information, go to or contact Matt Bannister at 646.786.6851  or Jim Kempski at 646.786.6865.

About Integrity Research:
Integrity Research Associates, LLC is an information and solutions provider specializing in alternative investment research. Its institutional investor clients use Integrity’s services to find non-traditional, non-consensus research providers and monitor existing ones. Integrity ResearchSelect® provides confidential, customized searches tailored to investors’ requirements. Integrity covers over 3,600 research firms in the U.S., Europe and Asia. Additional information about Integrity can be found at


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