Morgan Stanley clings to the overall award for best bank in electronic equities for the fourth consecutive year, so no other bank has ever won it.
Its lead is, however, growing less comfortable. This year UBS equalled Morgan Stanley’s tally, with three awards and two highly commended titles in the equities categories. UBS’s most significant accomplishment is winning the award for connectivity. Its award for new-issue technology is also an important success and is one area where its product has learnt from and then bettered Morgan Stanley’s site. UBS’s award for best equities research site was also hard won against much competition.
Morgan Stanley’s awards for programme trading, direct market access, and prime brokerage are however arguably more significant. To say that electronic trading technology is an increasingly important part of brokerage is an understatement. Technology’s importance to the equities trading business is twofold. Changing trading styles, such as the growth of direct market access and programme trading, and ever declining commissions, mean that the high volume, low-touch model is becoming the business model for players targeting the top accounts. Against this background, technological sophistication is also increasingly becoming the key differentiator between the leading brokers.
Prime brokerage is also a growing focus for top investment banks. Hedge funds with equities strategies account for a growing proportion of trading volumes. Prime brokerage is the channel through which investment banks can tap some of this growing revenue stream and here too technology is important.
Being the leader in these areas makes Morgan Stanley the best bank in the equities category.
Lehman Brothers’ impressive client technology products and internal infrastructure make it one to look out for. It only narrowly lost out to Morgan Stanley in both programme trading and direct market access.
Morgan Stanley’s loss to UBS in connectivity and to CSFB in advanced algorithmic trading shows that it is far from invincible and will need to work hard to maintain its lead.
PK
