In a new Tabb Group report, “U.S. Equities Market: 2013 State of the Industry,” analysts have forecast 2013 U.S. equity trading commissions and volume will rise 9 percent and 6 percent, respectively.
These increases come after three consecutive years of declining commission levels. For 2013, look for total dollar commission amounts at $13.7 billion, lower than the top 2009 days of $17.3 billion but higher than 2012’s $12.7 billion.
This compares to an 8 percent decline from 2012 vs. 2011; a 6 percent fall from 2011 vs. 2010 and from 2010 vs. 2009, a 12 percent drop.
So why the increase for 2013? Analysts attribute it to three factors: equities are estimated to outperform fixed income securities this year; there’s been stabilization in the U.S. economy and companies are seeing modest to strong earnings and with less quantitative easing coupled with rising interest rates, look for greater portfolio turnover and cash to go into equities.
Also on the rise this year is U.S. institutional execution-only commissions. They will jump about 12 percent vs. last year’s $4.4 billion. In 2012, ex-only commissions fell 17 percent to $4.0 billion as compared to 2011’s number.
The report also looks at highest-frequency trading (HFT) and estimates it will produce $2.2 billion in trading revenues this year, up from the previous year’s $1.8 billion. But this is lower than 2011’s $4.1 billion and $5.7 billion from 2010.
When looking at HFT as a percentage of overall trading volume in 2013, it is expected to hold steady at 52 percent as compared to 2012’s 51 percent and 2011’s 55 percent.
Back in 2009, similar to total dollar commissions, it reached at all-time high at 61 percent.
In other notes from the report, ?analysts forecast the following:?
- Portfolio managers will take bigger bets on fewer names such as activity seen in Herbalife (NYSE:HLF) and Dell Inc. (NASDAQ:DELL).
- Volumes will be impacted by the outcome of the continuing insider trading investigations. Should top hedge fund managers be indicted, volumes will suffer. But analysts see fines levied without arrests.
- For the hedge fund arena, news and regulatory battles will dominate headlines.?