Buy-side is a term used in

investment firms Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Traditionally associated wit ...

to refer to advising institutions concerned with buying investment services.

Private equity In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a ty ...

funds,

mutual funds A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV i ...

life insurance companies Life is a quality that distinguishes matter that has biological processes, such as signaling and self-sustaining processes, from that which does not, and is defined by the capacity for growth, reaction to stimuli, metabolism, energy tra ...

unit trusts A unit trust is a form of collective investment constituted under a trust deed. A unit trust pools investors' money into a single fund, which is managed by a fund manager. Unit trusts offer access to a wide range of investments, and depending ...

hedge funds A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as shor ...

, and

pension fund A pension fund, also known as a superannuation fund in some countries, is any plan, fund, or scheme which provides retirement income. Pension funds typically have large amounts of money to invest and are the major investors in listed and priva ...

s are the most common types of buy side entities. In sales and trading, the split between the buy side and

sell side Sell side is a term used in the financial services industry. The three main markets for this selling are the stock, bond, and foreign exchange market. It is a general term that indicates a firm that sells investment services to asset management fi ...

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 Sell side is a term used in the financial services industry. The three main markets for this selling are the stock, bond, and foreign exchange market. It is a general term that indicates a firm that sells investment services to asset management fi ...

brokerages A stockbroker is a regulated broker, broker-dealer, or registered investment adviser (in the United States) who may provide financial advisory and investment management services and execute transactions such as the purchase or sale of stocks and ...

are registered members of a stock exchange, and are required to be

market makers A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the ''bid–ask spread'', or ''turn.'' The benefit to the firm is that i ...

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

accrual Accrual (''accumulation'') of something is, in finance, the adding together of interest or different investments over a period of time. Accruals in accounting For example, a company delivers a product to a customer who will pay for it 30 days l ...

s rather than through risk management and the bid–offer spread. The 2010 Thomson Reuters Extel/UKSIF Survey shows that buy-side firms are placing more emphasis on sustainability issues in the research and advisory services they receive from brokers. Typically buy side firms do not provide custody services. Buy side can also refer to real estate. There is a sell side and a buy side in every transaction. While most

real estate technology Property technology (also known as proptech, PropTech, prop-tech, and real estate technology) is used to refer to the application of information technology and platform economics to the real estate industry. Property technology overlaps with financ ...

currently focuses on the sell side, there are a few companies that are developing tools for the buy-side.

Challenges facing buy-side

Globally buy-side asset managers are looking at increased regulation in regards to their use of

financial index In Statistics, Economics and Finance, an index is a statistical measure of change in a representative group of individual data points. These data may be derived from any number of sources, including company performance, prices, productivity, an ...

and benchmark data, including adhering to

IOSCO The International Organization of Securities Commissions (IOSCO) is an association of organizations that regulate the world's securities and futures markets. Members are typically primary securities and/or futures regulators in a national jurisdic ...

Principles. This is expected to increase cost and time for the buy-side in managing their data.'2013 Buy-Side Survey'
RIMES

References

Stock market Investment funds {{Stockexchange-stub