Traders brace for research crackdown as easy money dries up - News and Current Events | futures io social day trading
futures io futures trading

Traders brace for research crackdown as easy money dries up
Updated: Views / Replies:274 / 0
Created: by kbit Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors – all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you don’t need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Thread Tools Search this Thread

Traders brace for research crackdown as easy money dries up

  #1 (permalink)
Elite Member
Aurora, Il USA
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
kbit's Avatar
Posts: 5,884 since Nov 2010
Thanks: 3,303 given, 3,334 received

Traders brace for research crackdown as easy money dries up

Regulatory pressure to undo the traditional way brokers sell research alongside share dealing is alarming traders in Europe, who fear a further drop in business and more cost-cutting in an already tough environment.

At stake is the lucrative but opaque system under which fund managers pay brokers an all-in commission on every trade, charged to the fund's clients, which covers not only the execution of the deal but research and other services.

Total spending is estimated at 2 billion pounds ($3.4 billion) in the UK and about $10 billion in the US.

The asset managers are already reining in spending in the wake of new UK curbs on charging clients for research sometimes deemed "questionable" and company visits, traders say. A ban proposed by European markets watchdog ESMA on charging clients for research - though not yet final - is also seen eating into brokers' profits, pushing them to merge or cut costs.

Advocates of new rules say such changes will lead to a healthier and more transparent financial market, though for the industry it means another hit to trading profits in a post-crisis world where bank risk-taking has been curbed and trading activity has yet to recover fully.

"Brokers have already cut enormously, even the big ones, but equity markets have been difficult," said Neil Scarth, a principal at Frost Consulting. "We think that (new) research budgeting is going to cause them to cut further."

Traders say the bundled commission system helps grease the wheels of equity trading and allows brokers to be more than just "dumb pipes" into the stock market, but critics argue that there is no price transparency for clients and that a culture of one-payment-fits-all has led to excess spending and little scrutiny.

"In no other industry do you see such a bizarre way of delivering and paying for a service," said Richard Balarkas, consultant and former head of electronic trading at Credit Suisse.


Both brokers and asset managers are likely to be under pressure to restructure operations or cut costs, analysts and investors say, as trading houses will find it much harder to fund large research desks while asset-management firms will struggle to persuade clients to pay much higher fees.

"The trend is clearly going towards an increasing amount of research being paid for out of the asset manager's profits," said Arnaud Cosserat, fund manager at Comgest in Paris. "For us it will not dramatically change things as we have developed in-house research...But those in the middle will be squeezed."

Industry associations are lobbying against the ESMA proposals and have warned that trading volumes and market stability are at risk; investment-fund body ICI Global said at a recent hearing that unbundling would be a "major challenge".

"It is inevitable that there will be a decline in equity market volumes and a rise in price volatility (if unbundling goes ahead)," said Robert Buller, a spokesman for Paris-based broker Kepler Cheuvreux. "Less availability of research will mean less transparency on the correct pricing of stocks."

Advocates of unbundling argue that fears are overdone, accusing the brokerage industry of supplying too much research of too little value that is paid for by the end client.

One assessment from Morgan Stanley analysts is that the financial sector could cut up to $2 billion of excess costs from research. "The industry is spending more on research than investors are willing to pay for," they wrote in a 2014 report.

While detractors say this will unfairly harm coverage of small companies, some see constant demand for good research.

"Firms will have to make a choice as to whether they are a pure trading business or whether they are providing research... This will affect the big investment banks too," said Balarkas. "But quality ideas in overlooked companies will always be in demand."


Traders worry that traditional relationships built up between broker and fund manager may fall apart without the incentive of access to research and other services.

"It's a big preoccupation for us," said a London-based trader who declined to be named. "If clients have to pay a check to access bank research regardless of how much trading volume goes to that bank, why will they trade with that bank?"

The head of trading at a global asset manager, who declined to be named, said he had already begun discussing with one of his brokers about how unbundling might lower trading business.

For advocates of more transparency, this is an important step that will in the end benefit the client even if it skims some of the frothy profit from broker relationships.

"Asset managers are going to have to choose the things they want and only buy those," said Frost Consulting's Scarth. "It will take probably some of the excess profitability out of the relationship."

Traders brace for research crackdown as easy money dries up | Reuters

Reply With Quote
The following user says Thank You to kbit for this post:


futures io > > > > Traders brace for research crackdown as easy money dries up

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Upcoming Webinars and Events (4:30PM ET unless noted)

Wyckoff Hunting for Great Risk/Reward Ratio w/Gary Fullett

Elite only

Digging into the Details of iSystems w/Stage 5 & iSystems

Jun 5

Similar Threads
Thread Thread Starter Forum Replies Last Post
Easy Money: Mortgage Requirements Loosen Up Quick Summary News and Current Events 0 April 13th, 2013 04:00 PM
Economic Research and Discussion : Money GridKing The Elite Circle 44 November 26th, 2012 02:05 AM
Traders Brace for Volatility — and a Weak Jobs Report Quick Summary News and Current Events 0 September 30th, 2011 09:50 PM
Research Notes for Traders sysot1t Beginners and Introductions 2 June 10th, 2011 11:23 AM
LA Times: "Foreign currency trading is easy — an easy way to lose money" shodson News and Current Events 7 April 4th, 2011 09:20 AM

All times are GMT -4. The time now is 01:11 PM.

Copyright © 2018 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432,
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2018-05-21 in 0.14 seconds with 19 queries on phoenix via your IP