The NYSE may be seeking to break-up the cozy relationship between Wall Street brokerage houses and hedge funds, according to a report in Crain’s.
The New York Stock Exchange may begin asking big mutual funds and hedge funds to start trading shares directly with the institution, bypassing the Wall Street brokerage houses that have long handled their orders.
But are hedge funds really interested in trading directly with the exchange? Surely there are some who’d like to cut out the expenses of a middle-man broker but the relationship between brokers and funds is more complex than just placing orders for financial products and paying fees. Hedge funds often borrow money from the institutions they trade through, and this method of levering up their positions might be harder to come by if they were trading directly.
In short, trading directly through the NYSE might sound like an attractive offer but its probably not enough to Angelina Jolie* the relationship between the Brad Pitt hedge funds and the Jenifer Aniston brokers.
NYSE may bypass brokerages for trading [Crain's via Underthecounter]
* Please note: That picture is totally photoshopped.