The new generation of the sales trader is far more savvy with technology and market structure than their past counterparts, who relied on the firm’s customer-relationship management system, explained Kevin McPartland, head of research for market structure and technology at Greenwich Associates and author of ‘Sales Trader of the Future’.
“Technology advances will enable sales traders to send custom suggestions via the client’s preferred method of communication, and do that on a scale that wasn’t possible before,” he said.
It is the quality of those suggestions from these traders, which has lead them to having a higher commission-per-share earning year-over-year for the first time since the financial crisis, the report found.
However, only 29% of the 19 interviewed sell-side firms had increased their sales desks’ size in the past two years, mostly being mid-size and boutique firms, according to McPartland.
Another 29% of the brokers kept the number of sales traders employed steady, whilst 49% of them reduced the size of their trading desks, which was represented by more bulge-bracket firms.
This migration might correlate with the 25% drop in commission-weighted research share the bulge-bracket firms experienced between 2007 and 2014 compared to the 80% growth over the same period for mid-sized and boutique brokerages, according to Greenwich.
Besides providing research and having a personal relationship with clients, buy-side firms are asking sales-traders to be familiar with market structure issues as well as working more closely, but in a limited fashion, with their low-touch trade executions, said McPartland.
Such demands have resulted in 71% of the interviewed brokers placing market structure experts on staff, he added.
And since more than 55% of US equity trades still pass through sales desks, the buy-side can expect this renaissance to last.