QOTW (Dec 06th 2016): How does commission change over time across emerging markets?

How does commission change over time across emerging markets?


Chart 1: Wtd. Avg. Commission in basis points for Emerging Asia and European regions


Chart 2:  Percentage of commission volume across commission buckets

  • Advances in trading technology, changes in equity markets and high competition between brokers have contributed to a downward trend in commissions. In the past, we have explored commission rates across institutions as well as commission buckets in Europe. This week we explore changes in commission rates in emerging markets.
  • Institutional commissions for the three emerging markets have been steadily declining year over year since 2011.
  • The emerging markets buckets below 10 basis points and above 20 basis points show significant changes over the years. Volume in the 0 to 10 bps bucket increased by 17% between 2011 and 2016; volume in the bucket above 20 bps decreased by 18% during the same period. 
  • Volume in the commission rate bucket between 10 – 20 bps is reasonably steady.
  • While our data doesn’t explicitly capture the commission type, we see a shift in the distribution that likely reflects a move away from full service commission rates to execution-only and low touch rates. This shift has been in motion for the past few years.  

The above statistics are based on ITG’s Peer Group Database, which contains order-level information from approximately 180 buy-side institutions. Only orders executed between 2011 and the second quarter of 2016 with a commission rate below 100 bps re considered for this analysis. Commissions are dollar weighted and intepreted in basis points. Emerging market countries include trades executed in the following markets.

  • Emerging Asia - China, India, Indonesia, Malaysia, Pakistan, Philippines, South Korea, Sri Lanka, Taiwan, Thailand, Vietnam
  • Emerging Europe - Bulgaria, Croatia, Czech, Estonia, Hungary, Poland, Romania, Russia, Slovenia, Turkey
  • Latin America - Argentina, Brazil, Chile, Colombia, Mexico, Peru

Refer to ITG Peer Analytics for information available on ITG Peer Group Analytics.

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