Hedge Funds Name Lehman Brothers Top Firm for Execution and Sales-Trading in Alpha Magazine Ranking

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Hedge fund respondents rank Lehman Brothers best in market knowledge, trading intelligence, the ability to work an order and minimize its market impact and the consistency of day-to-day capital commitment.

Hedge fund managers say Lehman Brothers provides the best trade execution for both New York Stock Exchange–listed equities and Nasdaq Stock Market shares, according to a survey published in the January/February issue of Institutional Investor’s Alpha, released today.

To find the firms that are doing the best job of serving the trading need of hedge funds, Alpha retabulated the results of the survey of head equity traders at institutional money management firms that was published in November 2005 in Alpha’s sister publication, Institutional Investor, using only votes cast by the hedge funds that participated. Respondents were asked to rank broker-dealers on the quality of their execution and to rank the best electronic communications networks and alternative trading systems.

Hedge fund respondents rank Lehman Brothers best in market knowledge, trading intelligence, the ability to work an order and minimize its market impact and the consistency of day-to-day capital commitment. Morgan Stanley, No. 2 in both NYSE and Nasdaq trading, moves up three places for NYSE-listed stocks and one place for Nasdaq securities from the broader survey — an indication that hedge funds in particular value its trading capabilities.

Bear, Stearns & Co., which moves up one and two places from the broader poll to No. 3 in both NYSE and Nasdaq trading, is praised for its personal touch. Among NYSE trading firms, Merrill Lynch & Co. and Citigroup round out the top five; Citigroup and Goldman, Sachs & Co. are No. 4 and No. 5, respectively, for Nasdaq securities firms.

Below are the top five brokerages most highly rated for their execution quality by hedge fund traders, along with their rank among all respondents.

The Leading NYSE-Listed Trading Firms

RANK

Hedge funds

Ordered: 2005, 2004, Overall - Firm

1, 2, 1 - Lehman Brothers

2, 1, 5 - Morgan Stanley

3, 7, 4 - Bear, Stearns & Co.

4, 6, 2 - Merrill Lynch & Co.

5, 3, 3 - Citigroup

The Leading Nasdaq Trading Firms

RANK

Hedge funds

Ordered: 2005, 2004, Overall - Firm

1, 2, 1 - Lehman Brothers

2, 1, 3 - Morgan Stanley

3, 9, 5 - Bear, Stearns & Co.

4, 3, 4 - Citigroup

5, 4, 8 - Goldman, Sachs & Co.

Institutional Investor’s Alpha is the premiere publication about hedge funds, focusing on managers and investors, as well as on those that provide advisory, financial and technological services to them. With rankings that include the Fund of Funds 50, the Europe Hedge Fund 50 and the Hedge Fund 100, and profiles of many top investors and managers, Alpha is a must-read for anyone involved in the hedge fund industry.

For more information please visit http://www.institutionalinvestor.com/alpha.

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