Buy-side trading desks increased spending to cope with pandemic, report finds 

Coalition Greenwich report found that buy-side equities trading desks increased their budgets by 12% in 2020, while fixed income desk budgets declined by 1%.

Budgets for equities trading desks on the buy-side increased more than any other asset class in 2020 as firms grappled with changing market conditions during the pandemic, a Coalition Greenwich report has found. 

The report, which surveyed 418 buy-side traders across the Americas and EMEA in the second half of last year, found that buy-side firms typically spend $2.45 million per year on trading desks. 

It added that on average, budgets for buy-side trading desks  increased by 7%. Equities trading desks reported the largest increase at 12%, while fixed income buy-side trading desk budgets declined by around 1% during the year.

Of the increased budgets, 40% was allocated to technology to accommodate remote working conditions when traders transitioned to working from home. For equity trading desks, the largest technology expenditure was for order management systems, which comprised 27% of their average technology spend.

Overall, market data terminals were the single biggest technology spend for buy-side trading desks, consuming 35% of the budget.

“That success can be attributed in part to the continuous increase in technology investments, which have been growing as a share of overall trading desk budgets since 2015,” said Brad Tingley, research manager in the Coalition Greenwich Market Structure & Technology group.

Buy-side firms along with almost all other market participants have increasingly relied on technology throughout the pandemic to support their businesses remotely.

A recent survey by Broadridge found that firms on the buy- and sell-side expected to increase their spending on AI, blockchain, and cloud technologies by a third in the next two years.

The report also found that UK firms expected their budget for next-generation technologies to increase to 20% by 2023 with 88% of UK firms saying they wanted to implement robotic processing in the next two years.