New York, NY – Based on Integrity Research Associates’ 2010 ResearchFocus study on Commission Sharing Arrangements published last week, 28% of the buy-side users of commission management services at asset management firms felt that consolidating CSAs and CCAs through central CSA management platform would be “extremely valuable” to them, double the percentage that felt this way when we conducted our survey in 2009.
2010 Survey Says…
In addition, more than one-third of the buy-side institutions surveyed felt that a consolidated CSA management platform would be “somewhat valuable” to them. This data was collected through Integrity Research Associates’ survey of 214 buy side firms located in North America, Europe, and Asia conducted during the first quarter of 2010.
Integrity also asked buy-side participants what features of a CSA / CCA platform they valued most. The top three features sited by CSA users included “payment of interest on unused commission balances”, “commission management tools and reports”, and “consolidated CSA balances”. These three features were all seen to be “very valuable” by a similar percentage of survey participants.
Over 40% of the participants in this year’s buy-side survey of CSA users reported they felt that an independent firm would be the best potential manager of a consolidated CSA aggregation platform. This compares to 21% who felt that an agency broker, and an equal number who felt that a broker consortium, would be the best potential managers of a consolidated CSA platform. Only 11% of those surveyed felt that a bulge bracket investment bank would be an appropriate manager of a CSA aggregation platform.
Although 21% of those surveyed in the 2010 survey felt a broker consortium would be a good group to manage a consolidated CSA platform, this represents a sharp decline from the 38% who felt this way in last year’s survey.
Bulge Bracket Firms Lose Preeminence
It is interesting to note that over the past year investment banks have lost ground to agency brokers in providing commission management services. As mentioned above, a minority of buy-side participants feel that an individual bulge bracket firm would be a good manager of a consolidated CSA platform (and only one-fifth feel a consortium of investment banks would be a good manager of such a platform).
In addition, based on Integrity’s analysis bulge bracket investment banks garnered only 40% of the top 15 slots as best CSA providers in 2010, with agency brokers capturing the remaining 60%. In Integrity’s previous study, based on a survey in the fourth quarter of 2008, all nine of the Integrity Top Picks were full service investment banks.
For More Information
Readers may learn more about this topic from the 2010 Integrity ResearchFocus® report on Commission Sharing Arrangements, published on August 18, 2010. This 99-page 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 www.integrity-research.com/cms/csareport/ or contact Matt Bannister at 646.786.6851 or Jim Kempski at 646.786.6865.