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Nomura Is No. 1 in All-Japan Trading Team

Which firms provide the highest quality trading services in Japan, according to buy-side respondents in our 2012 All-Japan Research Team survey?

Nomura Securities Co. captures first place in Institutional Investor’s inaugural All-Japan Trading Team ranking, which is based on the opinions of portfolio managers that acquire Japanese investment research from multiple brokerages. Daiwa Securities Group claims the No. 2 spot, followed by UBS in third place.

In conjunction with II’s 2012 All-Japan Research Team survey, in which we asked buy-siders to name that country’s best researchers in 28 industries and four macroeconomic disciplines, we requested that they rank the brokerage firms they use on the quality of trading services provided. We received responses to this question from approximately 430 buy-side analysts and money managers at 225 firms that collectively manage some $791 billion in Japanese equities; that’s roughly 43 percent of the people who cast votes in the research team survey, and they represent 71 percent of the participating buy-side institutions.

“Nomura is doing an excellent job in finding liquidity for mid- and small-cap companies,” declares one U.S.-based advocate. (We keep the identity of survey respondents confidential to ensure their ongoing cooperation.) “They are also able to show good risk pricing if liquidity is not enough. That has been helpful in times when market turnover was very weak.”

Another money manager says that, compared with its peers, Nomura provides “better execution, due to order flow matching capabilities. I also appreciate the accuracy of their after-trading work.”

Daiwa also wins praise for the latter service: “They offer competitive pricing and accurate reporting — and they are accountable for their work,” notes one backer.

“The degree of expectation for sourcing liquidity and execution capability hasn’t changed much from the high level of recent years, but a clear difference is that these have to be provided in a form that includes electronic trading to a greater degree,” explains Akuzawa Tetsuo, who oversees Daiwa’s trading team. “In particular, the requirement of algorithmic capabilities seems to get increasingly demanding, while the level of requirement for dark pools varies depending on the type of investor.”

Meeting the multiple needs of various types of investors is also a priority at UBS, according to Trevor Hill, deputy head of Japanese equities and head of equity distribution for UBS. “Our trading and execution desk focuses on helping our clients source liquidity, achieve quality execution prices relative to benchmarks and understand the news flow that’s driving price action in the market,” Hill says. “We look to bring a global, macro vision to the micro decisions of when to wait patiently on the bid or when to lift the offer.”

Having a global footprint helps: “Their ability to execute across regions and markets is a big plus,” declares one money manager. Another client says he appreciates UBS for its “interesting block trade ideas.”

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