| Headline: Simple execution vs risk-taking Source: Euromoney Date: October 2001
Alternatively, they can leverage their balance sheets, taking bulk trades onto their own books – assuming the attendant market risk – in an attempt to extract more benefit from their dealing expertise. Returns of this sort often exceed the commission they command for what amounts to providing the client with immediate execution. The directions investors take (and the margins that banks make) – either for agency or risk trading – depend on many factors, from the level of hard-to-source securities included in a package to the desire of the client to execute a programme trade at speed. But the rising competition seen in recent years is altering the balance of the business. “We have a higher percentage of agency business than we do of risk business,” says Tom Levy, a managing director and head of portfolio products at Morgan Stanley in London. | |||||||||||||||||||||||||||||||||||||||||