GLOBAL - Merrill Lynch Investment Managers has rolled its transition management business, TRIM, into a newly formed entity in a joint venture with Merrill Lynch Global Markets & Investment Banking (GMI), the group's broker-dealer.
Michael Marks, managing director of TRIM and Charlie Shaffer, who joined Merrill Lynch GMI in New York earlier this year from Deutsche Bank, will be co-heads of the new business unit.
Although the business will run its own P&L, Shaffer will report to GMI, and Marks will continue to report to MLIM.
“We are creating a single, integrated transition team that will leverage our asset management expertise and the global execution infrastructure within our broker-dealer,” said Shaffer. “Accordingly, the transition team will have employees from MLIM and GMI.”
Marks said that the new business does not impact on TRIM’s claim to independence, despite close involvement with the broker-dealer.
“For a client that comes to us and wants a transition, we can now deliver a better service because we now have access to the technology which for certain transactions gives a lower cost to the client by being able to deal using the pipe work of Merrill Lynch to route orders directly through to the marketplace,” said Marks.
“Previously, whilst we might deal with Merrill Lynch and those orders might be routed through it was like using any other broker’s platform.”The new venture will also allow TRIM clients to trade on a principal or risk basis with Merrill Lynch, whereas previously TRIM was limited to trading on an agency basis only.
A risk trade in a transition means that the broker-dealer quotes a fixed price for the transition, and consequently takes on the risk of being able to trade the portfolio at the agreed price. But efforts from players like Deutsche Bank have historically failed to shape new transition management businesses with the buy-side, due to the fiduciary issue.
Shaffer responded: “A number of broker-dealers have tried to build bolt-on fiduciary capabilities within their organisation, but with no integration with their asset management businesses; similarly, investment manager style transition managers have tried to add their missing piece by building their own broker-dealers.”
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