The financial crisis and extreme volatility have created an opportunity for second-tier brokerage firms to win market share back from the bulge bracket.
The bulge bracket has transformed its business model the past decade to cope with falling commission rates and unbundling by focusing on automation and cutting back on sales-trader coverage. Large clients have responded by concentrating more of their business with fewer brokers to ensure full service while using commission-sharing arrangements to pay their smaller brokers and research houses.
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