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Bulge Bracket Firms & Algorithmic Trading: A Brave New World

Bulge Bracket Firms & Algorithmic Trading: A Brave New World

Aite Group estimates that bulge bracket firms currently account for more than 60% of market share in providing algorithmic trading services to the buy-side community

By Sang Lee, Sang Lee

Boston, MA, April 4, 2005 – According to a new report from Aite Group, LLC, bulge bracket firms have led the charge in expanding the role of algorithmic trading at buy-side institutions. Leveraging their existing relationships and wide breadth of execution-related services and products, bulge bracket firms have been successful at penetrating the buy-side community with their algorithmic trading services. However, bulge bracket firms are facing growing competition from agency brokers who are touting their un-conflicted trade execution services.

The report provides detailed profiles of five major bulge bracket firms in the algorithmic trading services market: Goldman Sachs, Morgan Stanley, CSFB, JP Morgan, and Lehman Brothers.

According to Sang Lee, Managing Partner of Aite Group and the author of the report, "For most bulge bracket firms, algorithmic trading complements their other trade execution services, including block trading and program trading." Lee also adds, "For those firms looking for a wide breadth of execution options as well as other value-added services, algorithmic trading services from bulge bracket firms appear to be the right match."

This is a 17-page Impact Note. Clients of Aite Group's Institutional Securities service can download the report.