City Fios

Fios Buyside

  • We have traditionally sold the system as an on-going solution to a sell-side bank's MIS reporting needs. In addition to this, the current market environment has driven us to offer our services as a one-off ‘snapshot’ exercise, to provide a robust reporting tool that can be used to analyse client activity
  • We have also identified a need to see this snapshot data from the buy side perspective:
    • Most asset managers have well-established processes in place to track the payment to their brokers of explicit commissions (e.g., secondary equity commissions, CSA cheques, etc.)
    • For OTC markets, however, where asset managers ‘pay’ for liquidity and research via turnover in products quoted on a bid/offer spread, many firms cannot accurately or consistently track the value of the business they direct to their brokers
    • As a result, broker reviews are often informed by simple volume metrics (aggregate nominal value and trade count), or by flow valuation data supplied by the broker being reviewed
    • We believe that there is an increasing appetite for enhanced broker metrics, given current market trends:
      • regulatory pressure for asset managers to be able to explain and justify all trading costs vs. the services taken
      • increasing commoditisation of many OTC products, leading to tighter spreads and reducing broker margins
      • a sharper focus in sell-side institutions on prioritisation of products and clients, in light of reducing liquidity and stricter capital requirements
  • We therefore believe that there is value in offering our sell-side offering to the buy-side as well, primarily in periodic snapshot format -
  • As well as the FIOS tool, we bring considerable insight into the methods and valuations that sell-side clients use in valuing OTC business
  • We are using FIOS to support Investit, a specialist investment management consultancy, to extend their annual Commission Analysis benchmark exercise to include fixed income products.