Buy side
Investopedia Financial Dictionary:
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Buy Side
The side of Wall Street comprising the investing institutions such as mutual funds, pension funds and insurance firms that tend to buy large portions of securities for money-management purposes. The buy side is the opposite of the sell-side entities, which provide recommendations for upgrades, downgrades, target prices and opinions to the public market. Together, the buy side and sell side make up both sides of Wall Street.
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For example, a buy-side analyst typically works in a non-brokerage firm (i.e. mutual fund or pension fund) and provides research and recommendations exclusively for the benefit of the company's own money managers (as opposed to individual investors). Unlike sell-side recommendations - which are meant for the public - buy-side recommendations are not available to anyone outside the firm. In fact, if the buy-side analyst stumbles upon a formula, vision or approach that works, it is kept secret.
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Buy side
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This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (January 2007) |
Buy-side is a term used in investment banking to refer to advising institutions concerned with buying, rather than selling, assets or securities. Private equity funds, mutual funds, life insurance companies, unit trusts, hedge funds, pension funds, and proprietary trading desks are the most common types of buy side entities.
In sales & trading, the split between the buy side and sell side should be viewed from the perspective of securities exchange services. The investing community must use those services to trade securities. The "Buy Side" are the buyers of those services; the "Sell Side", also called "prime brokers", are the sellers of those services.
Sell side brokerages are registered members of a stock exchange, and required to be market makers in a given security. Buy side firms usually take speculative positions or make relative value trades. Buy side firms participate in a smaller number of overall transactions, and aim to profit from market movements and accruals rather than through risk management and the bid-offer spread. The 2010 Thomson Reuters Extel/UKSIF Survey shows that buyside firms are placing more emphasis on sustainability issues in the research & advisory services they receive from brokers. Nearly 90% of buyside firms are planning to increase SRI & sustainability asset allocation in 2011.[1] Typically buy side firms do not provide custody services.
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In Short the entity paying the commission on trade would be a buy side and the one receiving it is a sell side.
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