Commcise Targets US Commission Aggregators

Commcise, a leading commission management and research evaluation provider, launched a new version of its commission management platform which is directly competitive with Cowen’s Westminster Research, Instinet, ITG and other commission aggregators.  By leveraging its technology platform, Commcise is hoping to undercut the broker fees charged by the aggregators.

Like other US commission aggregators, the new service is free to use by buy-side clients because fees are charged to brokers for reconciling trades.  Euronext, which acquired Commcise at the end of last year, is providing the operational support for trade reconciliations.  Because the Commcise software largely automates the reconciliations, the costs are expected to be less than the mainly manual operations of competitors.  Commcise intends to pass on savings through lower fees charged to brokers.

The new cloud-based service includes some of the features of Commcise’s full suite of capabilities, including budgeting, payment tracking, reporting and accounting.  Its rules-based software allows asset managers to disaggregate trades into research and execution components, and the service also offers strategy-specific accrual budgeting, accounting for transactional or P&L funding of research, and integration with all major OMS platforms.

As with its US competitors, Commcise offers asset managers a single point of contact.  Users can use the service the same “fire-and-forget” way they use other commission aggregators or use the platform to unbundle trades, set budgets and manage their research costs more proactively.

Commcise was founded in 2013 by five technology consultants who decided to productize custom commission management software they had developed for London-based asset managers.  It offers automated reconciliation, invoice management, commission budgeting, service history or consumption tracking, valuation engine, research evaluation (“voting”), commission management, share of wallet reporting and fund-level accounting functionality.  Because it was developed for the buy side, the platform is integrated with trade execution platforms facilitating the management of commissions at a fund level.

We evaluated Commcise’s offerings in our analysis of MiFID II Research Solution Providers released in April 2017, assessing it as the most comprehensive offering we reviewed.

Our Take

Commcise has long harboured ambitions to disrupt the cosy US commission aggregation market but it required the assistance of its new parent Euronext to make it happen.   Although Commcise has developed the most sophisticated commission management software, asset manager prospects were daunted by the cost of licensing the software and the need for internal IT support in running it.  The new cloud-based service which is free to the buy-side eliminates both obstacles.

Commcise is hoping more US asset managers will follow MFS, Capital Group and T Rowe Price in absorbing research costs, which would increase demand for the more robust budgeting and accounting that is Commcise’s strong suit.  However, even if US asset managers baulk at putting research costs on their P&L, the new service is competitively positioned.