Performance of Institutional Trading Desks: An Analysis of Persistence in Trading Cost
Publication Date
9-23-2008
Abstract
Using a proprietary dataset of institutional investors’ equity transactions, we document that institutional trading desks can sustain relative performance over adjacent periods. We find that trading desk skill is positively correlated with the performance of the institution’s traded portfolio, suggesting that institutions that invest resources in developing execution abilities also invest in generating superior investment ideas. Although some brokers can deliver better executions consistently over time, our analysis suggests that trading desk skill is not limited to a selection of better brokers. We conclude that the trade implementation process is economically important and can contribute to relative portfolio performance.
Document Type
Article
Keywords
Trading cost, Buy-side Institution, Trading Performance, Broker, Mutual Fund, Alpha
Disciplines
Finance
DOI
10.2139/ssrn.1272040
Source
SMU Cox: Finance (Topic)
Language
English
