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How do commissions vary by broker reason? - Jan 31st 2017

How do commissions vary by broker reason?

 

Chart 1: Value traded by Broker Reason for Peer stock universe

 

Chart 2:  Quarterly IS Cost by Broker Reason for Peer stock universe

 

Chart 3:  US Commissions by Broker Reason for Peer stock universe

  • There has been an increased emphasis on commission rates as Best Execution comes into sharper focus.  To provide a better look at average commission levels for different types of trading, we mined our ITG Peer Group Database for clients providing an indication as to the Broker Reason associated with each trade. 
  • As expected, research-driven trading displays higher commission costs than execution-only by a margin of about 3 cps; rates within each group are relatively stable quarter over quarter.
  • We don’t necessarily expect to see a trend in IS cost across the different reason codes. Research and execution costs fall in the 40-50 bps range, with research costs increasing quarter over quarter.  We’ll continue to build on this data over the next few months in order to review the connection between execution quality and commission rates.

Broker Reason data was pulled for a select group of 17 clients from ITG’s Peer Group Universe. Implementation shortfall costs are measured relative to desk release.

Refer to Peer Related Analytics for information available on Equity Related Analytics.

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