ConvergEx Group has become the latest execution-focused broker to ramp up its full-service credentials with the launch of a new corporate access service offering for institutional investors.
Although the US-based agency brokerage and technology provider already offers access to third-party research via its Westminster Research Associates arm, it is best known for its execution services. As well as offering a range of innovative and customisable execution algorithms to the buy- and sell-side, ConvergEx recently bought the NYFIX Millennium dark pool to complement its VortEx ‘streaming’ alternative trading system and ConvergEx Cross block-trading platform. The firm also purchased NorthPoint Trading Partners, a prime brokerage and fund services company, in November 2009 and bought Cogent Consulting, a supplier of commission management solutions to institutional money managers and broker-dealers, at the beginning of October.
“We have proven ourselves in the agency execution space and in the provision of third-party research services,” Carey S. Pack, chief executive officer of ConvergEx Execution Solutions, told theTRADEnews.com. “What we’re trying to do here is continue to scale the value curve by providing additional idea-generating services.”
ConvergEx is one of a number of execution-focused brokers that have expanded their suite of services to compete against bulge-bracket firms on a wider range of fronts. Agency brokerage Instinet nearly doubled the number of firms participating in its Instinet Access service when it added three new research providers in December. Knight Capital, another US brokerage with strong execution capabilities, expanded its Knight Corporate Access service last year to include more large-cap firms. Similarly, Liquidnet, the buy-side-only crossing network introduced a new service in June 2009, called Liquidnet InfraRed, that offers ‘on-demand’ access to issuers listed on NYSE Euronext for members of its trading community. Execution, a London-headquartered mid-tier brokerage, recently merged with Edinburgh-based investment bank Noble to expand its range of services to the buy-side.
ConvergEx’s new corporate access programme, called Management Access, will offer the broker’s sales trading clients direct access to senior executives from public corporations, including “intimate, knowledge sharing sessions” to provide insight and investment ideas. Pack said ConvergEx has access to senior corporate management teams from firms across a variety of market capitalisations, industries and geographies. “Making our global contacts more available to our sales trading clients is an important value-added service that complements our independent research network,” he said.
According to ConvergEx, each Management Access meeting is limited to a select audience and includes lengthy questions-and-answers sessions designed to encourage dialogue and promote clarity about the company’s initiatives and strategic objectives. The service will provide ConvergEx’s primarily US-based institutional investor clients with access to executives from global corporates. “Corporate access continues to be an important venue for portfolio managers to be able to ask questions directly to senior executives. Ultimately, it’s about helping our clients make better trading decisions by providing them with access to information and to decision-makers,” added Pack.
Closer relationships between investors and issuers are likely to be of increasing importance in the next few years as firms look to access the equity capital markets to support growth once economic activity gains strength. According to Bob McDowall, research director, Europe, TowerGroup, bulge-bracket firms may not be the best route to such corporates for institutional investors.
“Mid-tier firms tend to give a much more personalised, better value service to mid-cap companies than the bulge bracket. So the buy-side needs to keep their channels to mid-tier brokers to be able to take advantage of such investment opportunities as they arise,” he said.
McDowall also suggests that corporate issuers are keen to participate in corporate access programmes to reconnect with value-based investors. “Listed companies want investors that, subject to delivery of appropriate results etc., will stay for the medium to longer term. They are looking for corporate brokers that will help them identify and help them connect with value-based investors,” he said.