Institutional Investor's Alpha Magazine - September 2008 - (Page 65)

Research Top Trading Firms In Times Like These VOLATILITY HAS HAMMERED HEDGE FUNDS AND COUNTERPARTIES ALIKE. IN ALPHA’S RANKING OF THE TOP EQUITY TRADING FIRMS, FRIENDS MATTER MORE THAN EVER. By Imogen Rose-Smith A ny doubt that the markets are deeply year, moving up one place to dethrone last year’s top tradtroubled — and that Wall Street is wor- ing ﬁrm, Goldman, Sachs & Co., which falls to No. 5. ried — was swept aside on September No. 2 JPMorgan, which didn’t even receive enough 14, when 158-year-old Lehman Brothers votes a year ago to be ranked, beneﬁts from its May acquiHoldings went into a bankruptcy dive sition of Bear Stearns, including its well-regarded prime and 94-year-old Merrill Lynch & Co. abruptly agreed to brokerage and hedge fund equity trading franchises. be bought by white knight Bank of America Corp. Rounding out the top ﬁve are third-ranked Morgan StanTo say that investment banks are hobbled with balance- ley, up one notch from 2007, and Lehman Brothers, which, sheet problems and are cutting their capital commitments despite the problems in its mortgage and real estate busiand equity-trading personnel is to understate the magni- nesses that landed the ﬁrm in bankruptcy court, jumps tude of what is taking place, three places, to No. 4. foreshadowed in none-tooTraders from more than TOP EQUITY TRADING FIRMS subtle fashion this spring 300 hedge funds voted in Here are the brokerage ﬁrms that hedge funds say when Bear Stearns Cos. was this year’s survey, which provide the best overall trading service, based on their swallowed by a rival. The was administered in the expertise and market knowledge, traditional execution, government offered little spring and early sumalgorithmic trading and electronic trading services. comfort this month as it dimer (well before the most RANK rected Wall Street bankers, rec ent plot t w ist s for 2008 2007 FIRM essentially, to work it out Lehman and Merrill). Re2 Credit Suisse 1 among themselves, because spondents included rep5* JPMorgan Chase & Co. 2 resentatives from more federal support of the kind 4 Morgan Stanley 3 t ha n one t hird of t he that pushed New York– Alpha Hedge Fund 100, based Bear Stearns into the 7 Lehman Brothers 4 our ranking of the world’s arms of JPMorgan Chase 1 Goldman, Sachs & Co. 5 biggest single-manager & Co. and shored up mort6 UBS 6 hedge fund firms. Mangage giants Fannie Mae and 8 Citi 7 agers were asked to rate Freddie Mac was unlikely to 3 Banc of America Securities 8 equity-trading partners be offered again. 10 Merrill Lynch 9 and to say which of the Clearly, relationships 9 Deutsche Bank 10 ser vices these firms promatter move than ever, *Rank in 2007 was for Bear, Stearns & Co., which JPMorgan Chase & Co. acquired in vided was most imporfor Wall Street and for the May; JPMorgan did not rank last year. tant to them. hedge fund managers who The past year has been tough on the industry. Equity depend on its services. That is borne out by the results of Alpha’s second annual ranking of the Top Equity Trading hedge funds have struggled, and more than a few have lost money. The equity hedge (total) index, compiled by Firms, as judged by the hedge funds that use them. “Funds have become very focused on how they are ex- Chicago-based data provider Hedge Fund Research, lost ecuting their trades, who they are executing with and what 6.29 percent in the ﬁ rst half of the year (the Standard they are getting in return,” says Roy Martins, London- & Poor’s 500 index was down 12.65 percent). More and based head of international prime ser vices for Credit more hedge fund investors have begun to ask for their Suisse, the Swiss banking giant that tops the ranking this money back. Hard-hit players include East Setauket, Please visit our Web site, www.alphamagazine.com, to ﬁnd the Top Equity Trading Firms rankings, as well as more features, including the 2008 Hedge Fund 100, Alpha’s annual list of the biggest single-manager hedge fund ﬁrms in the world. On theWeb SEPTEMBER 2008 • INSTITUTIONAL INVESTOR’S ALPHA • 65 http://www.alphamagazine.com

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - September 2008

Institutional Investor's Alpha Magazine - September 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Culling the Herd The Good Guys: Ending the Cycle Interview: Press Credentials Cover Story: Rethinking Chris Hohn Strategies: At the Edge of the Earth Profile: Alpha Femals Strategies: Tails, You Lose Research Center: The Top Equity Trading Firms Alpha Bytes: The Light Is On Unhedged: Commentary: Not-So-Dire Diagnosis

Institutional Investor's Alpha Magazine - September 2008

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