TIM Group reports that results of the latest Extel survey reveal the share of buy-side commissions paid for trade ideas has increased in the last year. Trade ideas now form an increasingly important part of the service provided by brokerages for their institutional clients and now represent a 15% share of overall commissions paid by the buy-side, up from 13.5% the previous year.
Additionally the results show that the majority of clients utilising alpha capture, are the highest payers of commission overall. Over half of respondents were in the two highest-paying brackets as defined by Extel.
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TIM Group operates TIM Ideas, an electronic alpha capture platform. Alpha capture is a way of distributing trade ideas systematically rather than through phone calls or unstructured emails. TIM Ideas has over 4,000 equity salespeople actively entering trade ideas.
Tom French, Business Strategy Director at TIM Group noted that "the broader investment market is now recognising the beneficial effects of alpha capture for driving fund performance and getting value from their brokers."
The report also shows that 60% of sell-side firms saw alpha capture increasing in importance to them over the next year. Likewise 55% have seen their clients increasing the proportion of commissions they allocate to alpha capture.
When considering what’s at the heart of this growth Mr. French noted that "the benefits of alpha capture are numerous. It facilitates access to more frequent information on a broader range of stocks than research reports, and from brokers with varying specialisms.
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