Purple Duck…Different by Design

In honor of our founder, Don Potts, CAPIS is unveiling the purple duck logo. Ask Don about CAPIS and he will say, “We are a purple duck.” By that, he means that we are a different kind of institutional brokerage firm. We are a research provider, not a research producer; we fought for transparency of research commissions, while others tried to keep the status quo; and we trade for our clients, not against our clients. Throughout our 45-year history, CAPIS has been truly unique…a Purple Duck!

Formed in 1977, CAPIS was forged in the era of market deregulation. In addition to the Employee Retirement Income Security Act of 1974 (ERISA), Congress passed legislation to deregulate commissions on securities transactions, and Don Potts quickly identified an opportunity…to provide independent research. It is important to understand that CAPIS did not set out to “Produce” research. CAPIS set out to “Provide” research. This distinction was unique. We like to say, “Different by Design.”

At the time, most research was created by broker-dealers that had investment banking and proprietary trading arms, and the currency for procuring these research services was client commissions. Today, we refer to this payment mechanism as “bundled” commissions. A portion of the commission is allocated for research and portion for execution and broker dealer profit.

This structure came with two obvious problems.

  1. The conflict associated with the broker dealers’ investment banking function.
  2. The lack of transparency relative to the actual cost of the research.

The CAPIS solution was different…Different by Design. Not only was the research independently produced, but the cost of the research would also be explicitly defined from the start. With every commission dollar received, CAPIS set aside a portion of the commission for research. We created the term Research Purchasing Power, or RPP, to track research credits. This transparency quickly became the standard for third-party research providers. Today, transparency of commissions is commonplace. In 1977, CAPIS was truly unique.

Finally, CAPIS took one more unique step when building out its trading desks. CAPIS committed to an agency-only model. CAPIS trades for our clients, never against our clients. By not having affiliated venues or proprietary trading strategies, CAPIS traders are able to seek best execution without the conflicts inherent in many sell-side desks.

“CAPIS had a chance to make a better marketplace and that continues to be our goal.”

– Don Potts

While the capital markets continue to face new challenges, we remain firmly committed to providing independent research, fighting for transparency and being the standard for unbiased execution.

When you see the CAPIS Purple Duck, let it serve as a reminder — CAPIS is Different by Design.