Almost a third of the industry believes the greatest increase in electronic trading investment over the next 12 months will be in equities above any other asset class, the latest The Trade Poll has found.
Even though equities is the most familiar instrument for buy-side traders – and the one they already electronically trade the most – when asked in ‘which asset class do you expect to increase your electronic trading investment the most?’ 31.31% of respondents chose the class.
Rebecca Healey, senior analyst at research firm TABB Group, said she was surprised so many equities desks felt they needed to increase their spend in equities trading technology. She put the need down to a general desire for buy-side desks to be moving towards cross-asset trading in the future, meaning their legacy equities technology may not be compatible with the future of trading.
While equities was the leading asset class, listed/over the counter (OTC) derivatives was a close second, gaining 30.30% of the votes. The results reflect the widely-accepted expectation that an impending move to trading more derivatives on exchange would lead to an increased technology spend for the buy-side.
Healey said she saw three main themes to technology purchasing in the future: a need to build cross-asset platforms, a need for operational efficiencies within an organisation and the fact that buy-side desks were shrinking in size.
“We are seeing an increase in buy-side spending as organisations look to trade other asset classes. This could mean that they need to look at the whole infrastructure rather than just equities. Some buy-side desks are having to change their execution and order management systems to upgrade to platforms that can trade across asset classes,” said Healey.
The majority of participants considered foreign exchange to be the asset class which needed the least technology investment, with less than one fifth of the votes (18.18%) seeing it as the most likely area for increased technology spend. However there was a mere 2.02% difference between FX and fixed income (20.20%) as the top-of-mind asset class.
By Sophie Pallier