Adding Merrill Lynch to Bulge Broker Equities Analysis

As we approach the completion of our initial bulge broker analysis in equities – leaving Citi, Barclays and BNP Paribas modeling among some of the remaining work to be done – today’s addition to the thread is none other than the masthead for what used to be known as the “Thundering Herd”: Merrill Lynch Pierce Fenner & Smith. Kudos to those of you who acknowledge the oft-forgotten role played by Messrs. Pierce, Fenner & Smith.

Anyway, we add this one to the rankings at an unusual time, given that – now over a decade since their shotgun wedding – Bank of America has spent some time and energy in 2019 rebranding all but a few of the Herd’s remaining jewels. One impact of this effort will now place BofA Securities, LLC as the group’s institutional broker-dealer arm. To wit, from the bank’s latest 13F report:

“Effective May 13, 2019, the U.S. brokerage operations of Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), an indirect wholly-owned subsidiary of Bank of America Corporation (BAC), were reorganized into two separate legal entities (the Reorganization). In the Reorganization, BofA Securities, Inc., a Delaware corporation formed on September 1, 2015 (BofA Securities), is the new legal entity providing institutional services that were previously provided by MLPF&S. As such, the institutional services previously provided by MLPF&S are now provided by BofA Securities. Retail broker-dealer services will continue to be provided by MLPF&S.”

One other – possibly, unintended – consequence of this shift is that MLPF&S did not file a FOCUS report on SEC Form X-17A-5 for 2018, as it did for the 17 years prior – or, at least, we haven’t found it yet. The new entity did not file one either. And, we’re pretty sure that ~$300 billion in total assets, placing it somewhere in the neighborhood of Morgan Stanley & Co., did not disappear…

As for the equities business, Alphacution expects it to remain in the top 4 or 5 bank-owned broker dealers (even without the 2018 data)…

…and, on the basis of net equities, we would expect MLPF&S / BofA Securities, LLC to consistent with the prior rankings as well…

Stay tuned for more soon…

By | 2019-11-13T22:47:14+00:00 November 13th, 2019|Alphacution Feed|

About the Author:

Paul Rowady is the Director of Research for Alphacution Research Conservatory, the first digitally-oriented research and strategic advisory platform uniquely focused on modeling and benchmarking the impacts of technology on global financial markets and the businesses of trading, asset management and banking. He is a 30-year veteran of the proprietary, quantitative and derivatives trading arenas with specific expertise in strategy research, risk management, and techno-operational development. Contact: feedback@alphacution.com; Follow: @alphacution.