Number of traders on buy-side trading desk not impacted by technology, research suggests

Research from Greenwich Associates shows that the number of traders on desks has changed very little from 2018 to 2019 despite technological advances.

Technology investments on the buy-side trading desk have not come at the expense of traders, a recent report from Greenwich Associates has suggested.  

The research revealed that the number of traders on buy-side trading desks has remained essentially unchanged from 2018 to 2019 with eight on average in fixed income, slightly over seven in equities, and six in foreign exchange.

Head of research for the Greenwich Associates market structure and technology group, and author of the report, Kevin McPartland, stated that $1.25 million was spent on fixed income technology by typical asset managers last year alone.

However, he added that the electronification of fixed income in recent years has increased the capacity of traders on the buy-side trading desk, rather than removed them from their role. Evidence from the research found no negative impact on the number of human traders despite technological advancements.

Elsewhere, the research suggested buy-side traders are seeing responsibilities expand into new areas and asset classes. It found that 47% of fixed income traders are now also trading derivatives, 26% are trading foreign exchange and 20% are trading exchange traded funds (ETFs).  

For equity traders, Greenwich added, 60% of cash equity traders are also trading ETFs, 45% are trading derivatives, 35% trading in foreign exchange, and 21% trading fixed income instruments.

However, buy-side trading desk budgets remain tight and the average buy-side fixed income trading desk spends around 60% of the budget on trader compensation, with this increasing to almost 80% for smaller hedge funds.

“Today, firms can use tightly integrated enterprise trading technology that allows buy-side trading desks to trade more, achieve better executions, and do it at a lower cost,” added McPartland.