Internalization and Execution Quality: Ranking US Brokerage Firms
| Boston, MA, USA November 23, 2004 |
In a new report, Celent examines the impact of internalization on execution quality and ranks leading US brokerage firms in terms of the quality of the equity trade executions they achieve for their customers.
The increasing tendency for brokerage firms to internalize trades has raised more than a few eyebrows. This practice, whereby a brokerage firm trades against its own clients orders and denies these orders the possibility of interacting with the public markets, appears to be laden with conflicts of interest. However, Celents analyses show that major US brokerage firms have appeared to managed these conflicts well. examines the extent to which orders are internalized and what impact internalization has on execution quality.
The report examines in detail the execution quality of 16 leading US brokerage firms: AG Edwards, Bear Stearns, Banc of America, Charles Schwab, Citigroup, CSFB, Deutsche Bank, Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley, NFS (Fidelity), Prudential, TD Waterhouse, UBS, and Wachovia.
Execution quality was measured using a number of criteria, including speed of order execution and prices achieved for clients. Data used in the report come from the second quarter of this year. The table below shows the top three firms overall as well as those ranked tops for prices and execution speed.
|Source: Celent Communications|
of Celent Communications' Retail Securities & Investments and Institutional Securities & Investments research services can download the report electronically by clicking on the icon to the left. Non-members should contact firstname.lastname@example.org for more information.