US - Institutional portfolio trading volume increased by 25% from 2005 to 2006 as impressive US growth continued, Greenwich Associates has found.
The rise was down from the previous year (35%), but the continued performance has meant the total portfolio trading activity among the 122 US institutions participating in a Greenwich study increased to US$1.4trn.
Greenwich also estimated the total market-wide volume of US portfolio trading within its targeted universe of 180 buy-side trading desks at approximately $2trn.
According to Greenwich, the increased use of portfolio trades is generating considerable cost-savings for US institutions.
The typical institution interviewed for Greenwich’s portfolio trading research study executed about 46% of its total equity trading volume - which equates to more than $11.5bn in business on average - as portfolio trades during the 12-month period ending February 2006.
On average, this business was done at a commission rate of 1.9 cents per share, about two cents less than the typical commission rate on a standard NYSE agency trade, said Greenwich consultant John Feng.
“Even though market-wide equity trading volumes were robust between 2005 and 2006, the pool of institutional commissions paid to US equity brokers was basically flat,” said Feng.
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