rities themselves, according to data compiled by Boston-based Aite Group LLC, a brokerage-industry consultant [citation needed].
Now that computers have eliminated the need for trading floors like the Big Board’s, the balance of power in equity markets is shifting. By bringing more orders in-house, where clients can move big blocks of stock anonymously, brokers pay the exchanges less in fees and capture a bigger share of the $11 billion a year that institutional investors pay in trading commissions .
Market participants
Many years ago, worldwide, buyers and sellers were individual investors, such as wealthy businessmen, with long family histories (and emotional ties) to particular corporations. Over time, markets have become more “institutionalized”; buyers and sellers are largely institutions (e.g., pension funds, insurance companies, mutual funds, hedge funds, investor groups, and banks). The rise of the institutional investor has brought with it some improvements in market operations. Thus, the government was responsible for “fixed” (and exorbitant) fees being markedly reduced for the ’small’ investor, but only after the large institutions had managed to break the brokers’ solid front on fees (they then went to ‘negotiated’ fees, but only for large institutions).
However, corporate governance (at least in the West) has been very much adversely affected by the rise of (largely ‘absentee’) institutional ‘owners.’ |
