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TABB Group Introduces Monthly US Equity Brokerage Index, Publishes 2013 State of the US Equities Market Report

TABB Group is rolling out a US Equity Brokerage Index in response to strong demand from the firm’s research and consulting clients. The new index, with 10 underlying components and calculated monthly, is introduced in a new TABB research report, “US Equities Market: 2013 State of the Industry.”

“Our clients constantly ask us to provide projections on areas that impact their business, primarily market volumes, commission rates, electronic trading usage and high frequency trading numbers,” says Adam Sussman, TABB partner, director of research and author of the new report. “They also want to know if we’re bullish or bearish on the industry. In an effort to distill the factors we look at when making projections into an easy-to-read number, we created a monthly index”.

“One of the most interesting trends revealed in the chart,” says Sussman, who comments about the new index on TabbFORUM, “is the unprecedented disparity between the S&P500 and the TABB index since mid-2010. This demonstrates that transactional revenues and market performance have not moved in tandem for several years. But we believe that the divergence will not last. Either the S&P is bound for a correction, or it is time to go long US equity brokerage and the truth is somewhere in the middle. We’re modestly bullish on the industry and believe revenues and volumes will climb slightly this year.”

The new US Equities Market report includes US equity institutional revenue cut three ways (total, execution only and low-touch), market participant volumes, execution-venue market share, high- frequency trading revenue, mutual fund flows, leveraged US equity volumes and other key data.

A sampling of key state-of-the-market data includes:

  • HFT as a percentage of volume is expected to rise to 52% in 2013
  • TABB projects HFT will generate $2 billion in revenue in 2013 in US equities
  • 33% in 2012, market share for off-exchange trading volume is likely to increase in 2013
  • Although Q4 2012 saw an increase in block crossing, it is too soon to project if this type of growth will continue
  • US institutional equity brokerage commissions are forecast to rise 9% in 2013.

From an investor’s standpoint, it is difficult to complain about the performance of the market in 2012, Sussman says in the Executive Summary, based on the report’s findings. “Despite the incredible decline in volatility since September 2011, correlations remain relatively higher, particularly compared to the historical relationship between VIX and ICX prior to 2008. Until the market exhibits less correlation, we don’t expect a tremendous increase in institutional active equity trading activity.”

The 19-page report with 20 exhibits, including the US Equity Brokerage Index, is available now for download by TABB Research Alliance Equities clients and pre-qualified media at http://www.tabbgroup.com/Login.aspx. For more information or to [purchase the report, write to [email protected].

About TABB Group

With offices in New York, London and expansion to Asia-Pacific, TABB Group is the only financial markets research firm focused solely on capital markets, based on the proven interview-based research methodology of “first-person knowledge” developed by founder Larry Tabb. For more information, visit www.tabbgroup.com. In January 2010, TABB launched TabbFORUM, the online global capital markets community covering analyses of current issues, tracked daily by nearly 15,000 professionals.

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