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PRIVATE CLIENT FIRMS WEATHER THE STORM
20 July 2004
Despite lower overall volumes and revenues, the private client sector
retained healthy growth in 2003, with execution-only (XO) and online
trading clawing back some of the losses since 2001.
Further consolidation and rationalisation of business operations,
alongside growing online trades and moves to non-certificated dealing
contributed to the increase in funds under management, up 14% on
2003, according to the 12th annual COMPEER survey of the private
client industry. Key findings of the COMPEER survey include:
- Securities worth around £239bn were held for private clients
by UK firms on 31st December 2003, against last year’s figure
of £219bn, a 14% increase. Discretionary clients represent
the biggest proportion - £130bn, with Advisory at £65bn
and XO at £44bn. Nominee trades in 2003 accounted for 70%
of all trades transacted.
- Despite increasing competition from stamp duty-free CFDs, execution-only
(XO) volumes improved, with online trades breaching the 1 million
barrier for the first time during the first quarter of 2004. These
accounted for 47% of all “true” XO business.
- Costs to firms increased but costs to clients per trade have
fallen. The average cost to a client per XO trade has reduced
to an average of £28.
- This is principally due to more clients moving into nominees,
increased volumes, better trading and settlement software and
greater use of online trading (either by online specialists or
firms using their own online system).
- Volumes are currently running at around 35,000 per day. 12.7
million agency trades were transacted by market firms and a further
6.3 million by non-market firms in 2003, with bulk trading forming
a significant proportion of the latter figure.
Angela Knight, Chief Executive of APCIMS said:
"2003 was another difficult year for the Private Client sector,
but cost-cutting, better trading performance and focussing on quality
has resulted in an increase in funds under management, with some
firms moving firmly back into profit. Firms still quote the market,
regulatory change and consolidation as their main uncertainties,
though overall the outlook is favourable for all sectors of the
industry. In summary, the black clouds have moved away, though the
sector is not yet into sunshine.”
Notes to editors
- The Private Client Stockbroking and Fund Management Survey 2004
is produced by ComPeer Ltd using information collected from 70
APCIMS members, London Stock Exchange and CrestCo.
- APCIMS represents the overwhelming majority of UK private client
stockbrokers and investment managers, who together act for more
than 12 million shareholders.
- Click
here for a summary of the ComPeer report's key findings.
For further information call
Kevin Sloane, Head of Information, APCIMS (office 020 7247 7080;
mobile 07917 406939; email kevins@apcims.co.uk)
Richard Bethell, ComPeer
(work 01293 822366; email richard.bethell@compeer.co.uk)
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