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Financial Services, Banking Article, surviving equities trading
Article at a glance:

Surviving the squeeze in equities trading

  • The explosive growth in derivatives and new markets conceals a weak position for most broker-dealers in cash equities.
  • Most broker-dealers have defied the pessimistic forecasts of a mass exodus, but powerful forces—regulation, technology, new buy-side behavior, and intense competition—are squeezing margins.
  • Although pulling out may be neither feasible nor sensible, survival requires firms to restructure or reinvigorate their activities by locking in new trading flows, getting more from execution, and reinventing research.
This article contains the following exhibits:
  • Exhibit 1: Buy-side traders saw confirmed reductions in cash commissions through 2005.
  • Exhibit 2: Brokers are investing heavily in alternative executions.

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