Program Background

General Information

Fast Facts

  • 64 percent of the credits were created by U.S. equity trading, 35 percent came from non-U.S. and 1 percent from emerging markets trading.
  • $456,907 in brokerage credits were generated in calendar year 2013.

The CalSTRS Directed Brokerage Program, which started in the 1980s, was designed to take advantage of the credits being created from CalSTRS investment transactions both by internal staff and external managers. These credits were used to help offset the cost of running the overall investment program, thereby reducing the burden on the Appropriated Support budget and the Continuously Appropriated budget.

In the decade of the 2000s, we saw the creation of credits drop as they were discontinued on the issuance of new debt obligations within the fixed income industry. The level of new credits created this past calendar year marks the sixth consecutive annual decline and represents an 85 percent drop from the level of credits created in 2007.

Directed Brokerage Credits Generated Each Year

Bar chart showing steady decrease of credits from a little over 4,000,000 in 2000 to about 500,000 in 2013.

Expenditures and Rebates

There were no directed brokerage expenditures in 2013. However, during the year, over $250,000 was requested back in the form of rebates. These funds have been deposited into the fund as additional income.

Directed Brokerage Expenditures in 2013


Directed Brokerage Rebates in 2013


Bar chart showing directed brokerage expenditures with a high of over 4,000,000 in 2002 to almost nothing in 2010 and directed brokerage credits with a high of over 4,000,000 in 2001 to a low of about 500,000 in 2013.

Directed Brokerage Outstanding Credits at December 31, 2013

Broker / Dealer Balance Percentage Diversity
Knight Capital Americas $139,759 43.8% No
ConvergEx 64,542 20.2% No
Abel Noser 37,385 11.7% No
Capital Institutional Services 32,908 10.3% No
Instinet 18,855 5.9% No
Montrose 13,456 4.2% Yes
Frank Russell 11,852 3.7% No
PCS 26 0.0% No
M.R. Beal 2 0.0% Yes
SSgM 2 0.0% No
Cabrera 1 0.0% Yes

Total Balance: $318,788

Cash Ending Balance

Bar chart showing cash ending balance high of over 5,000,000 in 2001, falling to near 0 in 2006, rising to over 2,000,000 in 2007, and ending near 250,000 in 2013.