Merrill Lynch & CSFB Lead the Field in Operations Performance

"Investment Managers are increasingly choosing their brokers based on Operational Performance. Brokers who can provide a timely and accurate service for confirmation and settlement processing as well as exemplary customer service are winning business, particularly for large-scale program trades."

In a recent Europe-wide survey, Z/Yen Limited interviewed 59 leading investment managers in 10 European countries to assess the importance of Operational Performance in Broker selection and to rank the services provided by 11 leading Brokers for both Equities and Fixed Income products.

For Equities, Merrill Lynch were ranked highest for both Core Operational Performance and Customer Management. Geoff Mizen, Director of European Client Services at Merrill Lynch commented: "The Z/Yen survey results are a wonderful acknowledgement by clients that our efforts are correctly focused and in tune with their requirements. We've listened to clients and worked hard to provide an outstanding service at every point of delivery, from trade booking through to settlement. As a result, we've invested in new technologies, revised processes and focused on quantitative performance management. However, we realise that none of us can afford to be complacent. As this survey highlights, clients are increasingly demanding greater trade confirmation timeliness and accuracy, single points of contact across multiple products and many are evaluating operational performance as part of their overall front office broker rankings. In response, we will continue to improve our service offering in close partnership with our clients."

For Fixed Income, CSFB were ranked highest for both Core Operational Performance and Customer Management. Roger Bartlett, Vice President for European Operations at CSFB, said "The recent Z/Yen results are extremely comprehensive, providing transparency to both core transaction processing and proactive relationship management across a peer group of brokers. This industry-wide benchmarking will continue to raise the bar within the securities industry and ultimately benefit the service our clients receive. CSFB's excellent performance is a testament to the efforts of the Operational Team and demonstrates CSFB's focus towards the industry's evolving Customer Service culture."

The survey found that Operational Performance continues to be a growing factor in the "Broker Vote" (the process by which Investment Managers allocate business to Brokers):

• 75% of Investment Managers penalise their brokers for poor Operational Performance and 55% have recently struck-off or suspended a broker;
• A growing number of brokers have a formal "Broker Vote" in which Operations participate. For these brokers, Operational Performance contributes an average of 13% of the "Broker Vote";
• Several investment managers are implementing systems to monitor brokers' Operational Performance. They plan to feed this information back to their own traders and fund managers as well as to the brokers themselves.

Jeremy Smith, a Director at Z/Yen, said, "Investment Managers will no longer tolerate poor operational performance from their brokers and they are demanding the same level of service for Fixed Income products as for Equities. At STP grows and the market becomes more competitive, brokers will need to continue improving their systems and processes."

Z/Yen surveyed 59 leading Investment Management companies in 10 European countries during October and November 2003. The survey was commissioned by 11 leading brokers, to gain an independent view of how their services are perceived and to help prioritise their clients' customer service needs. The survey covered 14 benchmark categories including confirmation timeliness and accuracy, settlement and interest claim performance, customer service and relationship management.

A summary of results is available.