Major brokerages have branched out well beyond traditional cash
equities and trade execution. They're offering flashy direct-market
access (DMA), algorithmic trading and prime brokerage services
spanning an ever wider array of asset classes and order types. They
have also been investing in regional exchanges and alternative
trading systems (ATSs) to sharpen their competitive edge and to
have a say in how market structures evolve.
Only a few years ago, a hedge fund or other institutional client
had a limited menu of trading choices: call a broker, deal directly
with a counterparty or buy a seat on an exchange. Today they can
seek liquidity, click and trade with an abundance of DMA and
smart-order routing technologies and algorithms; scan as many ATSs
and electronic communications networks (ECNs) as they wish;
coordinate their activity via order management systems and
execution managements systems (EMS); and monitor and control costs
and risks with transaction cost analysis, commission management and
other high-performance software. Institutions can finance and clear
trades through prime brokerages, get research from their analysts,
and do pre-trade analysis and charting. The options seem endless
but are increasing all the time. |
