Morgan Stanley

Trick Shot: Robinhood Underwrites MEMX

“Principles for the Development of a Complete Mind: Study the science of art. Study the art of science. Develop your senses - especially learn how to see. Realize that everything connects to everything else.” - Leonardo da Vinci   If there ever was a time to see how things are connected to other things, it is now. This is particularly true in places where something that is "free" is interpreted to be "without cost." After all, like "free" drinks at the casino, human nature tends to regress to its most lizard-like tendencies when presented with a frictionless environment... When will we ever learn that "free" is never the best price? Anyway, without becoming distracted by a rant about the true cost of Facebook, et al, let's take a brief look at the impact of "commission-free" trading on the macrostructure of the US market ecosystem over a very short window since October 2019: Thanks, in large part, to the popularity of retail broker, Robinhood Financial, LLC ("Robinhood) - the upstart financial [...]

By | 2020-06-18T00:20:58+00:00 June 18th, 2020|Alphacution Feed|

Virtu’s Optionality? Some Good News…

“That which does not kill us makes us stronger.” - Friedrich Nietzsche “We adore chaos because we love to produce order.” ― M.C. Escher   One intangible cost of being the sole US publicly-traded market making firm is the required level of financial and operational transparency - and the investor relations burden - that comes with that status. In this case, that cost may be unusually high because of the relative opacity of the competitors in this sector - what Alphacution typically refers to as the structural alpha zone of its asset management ecosystem map - coupled with the unparalleled use of technology and extraordinary magnitude of wealth generated by that small group of players. To compound this dynamic, recent dramatic shifts in the landscape for retail order flow sparked by the late 2019 moves - en masse - to $zero commissions by retail-oriented brokerage platforms, and the quick follow-on consolidations of TD Ameritrade (by Charles Schwab) and E*Trade (by Morgan Stanley), and given the pandemic-fueled volatility and volumes of [...]

By | 2020-03-12T22:36:47+00:00 March 12th, 2020|Alphacution Feed|

Global Banking Brain Drain Slowing

Brain drain - in this case meaning the loss of valuable human capital - is one of those silent malignancies in an organization that is difficult to measure, and the impacts from which are typically not realized until the damage has already been done. With the global banking sector - and its constituent business segments, from retail banking to wealth management to capital markets - still in the midst of unprecedented and persistent transformation, the risk of ongoing losses of intellectual capital and corporate memory that leave via the elevator each day is still quite high - or, at least, it is perceived to be so. (The knock-on effects to the supply chain are notable here, as well.) It is largely for this reason that we have been monitoring and measuring various headcount-dependent metrics in the financial services ecosystem: Interesting and telling on a per-company basis, fascinating and illuminating of broader trends on a composite basis. The former being a weaker intelligence signal, the latter being a much stronger signal. So, here's [...]

By | 2018-02-28T16:30:37+00:00 June 1st, 2017|Alphacution Feed|

Welcome Back to 2006: Top #InvestmentBanking Headcount Roundtrip

Well, it would have been the Top 10 investment banks, but @Barclays doesn't publish quarterly headcount for some reason. Maybe they will help us fix that. Anyway, for the Top 9 investment banks, total headcount is down 13% from its peak in Q3 2011. And, with at least 2 of the 9 - @Deutsche Bank and @CreditSuisse - reporting significant headcount reductions for the road ahead as part their year-end 2016 financial releases and 2017 guidance, it's not much of a stretch for us to predict that the Wonkavator is highly likely to travel further back in time than year-end 2006 (see below). I just want to let this picture dangle for a bit without much comment. We will be revisiting and significantly expanding this analysis in the weeks and months ahead as we roll into the development of our 2nd Annual Global Bank Technology Spending study. Stay tuned...

By | 2018-02-28T16:33:43+00:00 March 2nd, 2017|Alphacution Feed|