UBS keeps edge in European equity trading, Morgan Stanley leads on research - survey

LONDON (Reuters) - UBS UBSG.S held on to its position as Europe's top equities broker in 2016, according to a Greenwich Associates survey, helped by its strength in algorithmic trading and research.

The logo of Swiss bank UBS is seen on a branch office in Zurich, Switzerland November 8, 2016. REUTERS/Arnd Wiegmann

With a market share of more than 10 percent, the Swiss firm, which relies more than most peers on equity trading, topped Greenwich's 2016 survey, seeing off a challenge from second-placed Bank of America Merrill Lynch BAC.N.

The quartet of Deutsche Bank DBKGn.DE, Morgan Stanley MS.N, Credit Suisse CSGN.S and JPMorgan Chase & Co JPM.N took joint third with a market share of about 7 percent each.

The survey by Greenwich Associates, a financial consultancy and research firm, is based on responses from 178 buy-side institutions and weighted by commissions paid to brokers.

UBS was helped by its healthy lead in market share for algorithmic trading which accounts for a significant portion of regional equity volumes. Its 13.9 percent market share in this area was ahead of Morgan Stanley’s 9.3 percent market share.

The 2016 survey is one of the last before a sweeping regulatory overhaul takes effect across European capital markets in January 2018. MiFID II, or second Markets in Financial Instruments Directive, is aimed at making EU financial markets more transparent, competitive and secure.

One of the biggest consequences for investment banks is the way in which fund managers pay for research since MiFID II calls for payments for research and trading services to be separated.

The impact of this separation, or “unbundling,” is already under way.

Institutional investors have cut the share of their commissions attributed to research to 50 percent of the total in 2016 from 58 percent two years ago, Greenwich research shows.

This shift is likely to put brokers whose research is highly regarded on a firmer footing compared to peers.

Morgan Stanley topped Greenwich’s list of market share leaders in European research and advisory. UBS and Exane BNP Paribas tied for second.

Reporting by Vikram Subhedar; Editing by Adrian Croft