High-touch trading remains prominent amongst buy-side

Report reveals high-touch trading represents over half of buy-side trading in US equity markets.

Buy-side traders are continuing to execute the majority of their order flow through high-touch methods despite the rise of electronic trading, according to a report.

A poll of over 100 trading professionals, carried out by Greenwich Associates, found 88% consider voice communication as very or extremely critical to their trading workflow, particularly for pre- and post-trade activities.

For the US equity market - often considered the most electronic market in the world - the report revealed 54% of commissions were high touch in the first quarter last year.

This statistic is expected to dip only slightly within the next three years to 49%.

Traders globally have agreed one-on-one conversation is still a critical part of institutional trading despite the increasing trend towards electronic trading.

“A personal phone call as opposed to electronic chat can be an important way for brokers to provide white-glove service to their clients,” the report said.

Richard Johnson, vice president of market structure and technology at Greenwich Associates and author of the report, explained voice is a more personable approach. 

“The fact that so many traders still rely on voice communication when trading electronically speaks to the more personal nature of a phone conversation and the nature of the buy-side/sell-side relationship,” he said.

The rise of FinTech has seen faster and more efficient methods of communicating, but “voice communication helps traders convey nuance, build trust and develop stronger relationships with their clients and brokers, and trading is—and always has been—a relationship business,” Johnson concluded.