MPI Europe, the specialist financial services consultancy, publishes today the results of our annual market wide survey for brokerage commission sharing agreements. Following an even greater response than the previous year’s record participation, with over 70 firms contributing, the results indicate the continued role of Commission Sharing Agreements (CSA) in improved investment efficiency, but that there are now significant challenges in both the risks and efficiency of the commission sharing processes that need to be addressed. For firms using CSA, 2013 looks to be a year of consolidation and process improvement, rather than pure growth in mature markets.
Other key trends include:
- The still increasing role of regulation for CSA, with regulatory risks featuring strongly by 83% of global firms. Global firms indicated a higher risk around regulation in the market compared to their European counterparts. It is our conclusion that improved processing would make firms less sensitive to regulation issues and allow them to serve local requirements more fully.
- Despite reductions in trading volumes in 2012, over two thirds (68% of respondents) still expect an overall increase in the use of CSAs in the market over the next 12 months.
- Part of this expected growth may be explained by increased interest beyond the more mature CSA markets, in areas of Europe such as the Nordic region. However, there was strong support for the conclusion that European regulatory and tax issues for commission sharing agreements are holding back this potential expansion.
MPI surveyed a wide range of financial sector firms to understand the key trends, challenges and opportunities in the use of commission sharing agreements. The survey was conducted during autumn 2012 and gained responses from over 70 asset managers, brokers and research providers. This annual survey has run since 2010 and has shown strong and increasing interest year on year.