Institutional Investor's Alpha Magazine - September 2008 - (Page 66)

New York–based Renaissance Technologies Corp., whose Renaissance Institutional Equities Fund has seen assets drop from $22 billion to approximately $19 billion this year, and two Manhattan-based ﬁrms, $15.3 billion Atticus Capital and $9 billion Ospraie Management. In this dark climate managers want to know more than ever who their real friends are. “I have never seen so many people so confused” by the equity markets, says Barry Savitz, co-founder of Stamford, Connecticut–based Greenwich Prime Trading Group, which handles outsourced trading for about 40 hedge funds. Facing enormous pressure to perform — in many cases to ﬁnd a way to reverse losses — fund managers are increasingly worried about the security of their order ﬂow. “With hedge funds, anonymity is always important, but that concern has seriously escalated,” says Andrew Silverman, Morgan Stanley’s head of electronic trading distribution in New York. To claim ﬁrst place this year, Credit Suisse does well in all four areas of the survey. The Zurich-based bank is No. 2 in Trading Expertise & Market Knowledge, which hedge fund managers say they value more than anything. It also ranks second in Algorithmic Trading, third in Traditional Execution and fourth in Electronic Trading/Direct Market Access. New York–based Banc of America Securities, No. 8 overall, quietly scores a coup by ﬁ nishing ﬁ rst in Algorithmic Trading, improving on its fourth-place ﬁnish of one year ago. Its acquisition of Merrill Lynch can only help. Although New York investment bank Jefferies & Co. fails to make the top ten overall because it drew insufﬁcient accolades for Electronic Trading/DMA or Algorithmic Trading, it ranks No. 1 in Traditional Execution and in Trading Expertise & Market Knowledge. The amount of money to be made from hedge fund–based equity trading is huge. According to a July 2008 report by Greenwich Associates, a Stamford, Connecticut–based research firm, hedge funds were responsible for about 30 percent of the $26 billion in equity-trading commissions generated by institutional investors in the U.S. during the 12 months ended in TOP EQUITY TRADING FIRMS BY CATEGORY The following tables show how the top brokerage ﬁrms fare in each of the four major areas of equity trading, based on voting from more than 300 hedge fund ﬁrms that use their services. TRADITIONAL EXECUTION RANK 2008 2007 1 2 3 4 5 6 7 8 9 10 10 4* 5 8 6 1 7 2 9 — FIRM Jefferies & Co. JPMorgan Chase & Co. Credit Suisse UBS Morgan Stanley Goldman, Sachs & Co. Lehman Brothers Citi Deutsche Bank Merrill Lynch ALGORITHMIC TRADING RANK 2008 2007 1 2 3 4 5 6 7 8 9 10 4 1 3 5 9 2 6* 10 8 7 FIRM Banc of America Securities Credit Suisse Lehman Brothers Morgan Stanley UBS Goldman, Sachs & Co. JPMorgan Chase & Co. Merrill Lynch Citi Deutsche Bank ELECTRONIC TRADING/DIRECT MARKET ACCESS RANK 2008 2007 1 2 3 4 5 6 7 8 9 10 4 7 1 3 6* 5 9 2 10 8 FIRM Morgan Stanley Lehman Brothers Goldman, Sachs & Co. Credit Suisse JPMorgan Chase & Co. UBS Citi Banc of America Securities Merrill Lynch Deutsche Bank TRADING EXPERTISE & MARKET KNOWLEDGsE RANK 2008 2007 1 2 3 4 5 6 7 8 9 10 7 5 3 2** 9 1 8 4 6 — FIRM Jefferies & Co. Credit Suisse Morgan Stanley JPMorgan Chase & Co. Lehman Brothers Goldman, Sachs & Co. Citi UBS Banc of America Securities Deutsche Bank *Rank in 2007 was for Bear, Stearns & Co., which JPMorgan Chase & Co. acquired in May; JPMorgan did not rank last year. **Rank in 2007 was for Bear, Stearns & Co.; JPMorgan Chase & Co. was No. 10 last year. 66 • INSTITUTIONAL INVESTOR’S ALPHA • SEPTEMBER 2008

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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