The TABB Group will launch its new US Equity Brokerage Index with 10 underlying components; it will be calculated monthly and comes in response to research and client demand.
The index has been introduced in the new TABB research report, “US Equities Market: 2013 State of the Industry.”
Adam Sussman, TABB partner, director of research and author of the new report?said in a press release,?”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. 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”.
He added about the new index on TabbFORUM, “One of the most interesting trends revealed in the chart 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 will include US equity institutional revenue divided ?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.
Here’s a sample of the state-of-the-market data found in the 19-page report with 20 exhibits:
- 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.
- Last year’s 33% 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.
In the report’s Executive Summary, Sussman noted that from an investor’s standpoint, it is hard to complain about the market’s 2012 performance. He said 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.”