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How Broker Ability Affects Institutional Trading Costs


Alex Frino


University of Sydney - Discipline of Finance; Financial Research Network (FIRN)

Carole Comerton-Forde


University of Melbourne - Department of Finance; Financial Research Network (FIRN)

Christian Fernandez


University of Sydney - Discipline of Finance

Teddy Oetomo


University of Sydney - Discipline of Finance
July 2004


Abstract:     
This paper demonstrates that broker research and trade execution ability has a significant impact on the cost of institutional trading. The results reveal that there is significant variation in the ability of brokers to control execution costs. Trades executed by brokers with stronger research ability exhibit a higher permanent price impact while those executed by brokers with better execution ability exhibit a lower temporary price impact. Brokers are also found to specialise on an industry level which gives rise to variation in ability within a brokerage house.

Number of Pages in PDF File: 27

Keywords: transaction costs, institutional trading

JEL Classification: G10, G20

working papers series


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Date posted: August 13, 2003  

Suggested Citation

Frino, Alex, Comerton-Forde, Carole, Fernandez, Christian and Oetomo, Teddy, How Broker Ability Affects Institutional Trading Costs (July 2004). Available at SSRN: http://ssrn.com/abstract=421080 or http://dx.doi.org/10.2139/ssrn.421080

Contact Information

Alex Frino
University of Sydney - Discipline of Finance ( email )
Futures Research Centre
P.O. Box H58
Sydney NSW
Australia
+61 2 9299 1809 (Phone)
+61 2 9299 1830 (Fax)
Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

Carole Comerton-Forde (Contact Author)
University of Melbourne - Department of Finance ( email )
198 Berkeley Street
Carlton VIC 3010
Australia
Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

Christian Fernandez
University of Sydney - Discipline of Finance ( email )
P.O. Box H58
Sydney, NSW 2006
Australia
Teddy Oetomo
University of Sydney - Discipline of Finance ( email )
P.O. Box H58
Sydney, NSW 2006
Australia
Feedback to SSRN (Beta)


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