Buy-Side Trading Desks: Eye On Electronic Capabilities

tradersmag   Extract courtesy of TradersMagazine / Phil Albinus

Although the buyside has been known for its cautious and conservative approach to change and adapting to new market conditions, those days may be over. According to a new study by market research firm Tabb Group, the rate of change within the US buy-side equity trading desk is accelerating even though commissions have declined 19 percent since 2010.

In the first of three new reports entitled US Institutional Equity Trading 2014: Bellwethers of the Buy Side, partner and director of research Adam Sussman, senior analyst Sayena Mostowfi, and research analyst Valerie Bogard interviewed 108 asset managers in the U.S. Along with identifying firms that are on the IT leading edge, they found “a middle majority of firms who recognize the threats of being behind and are actively engaged in bringing similar capabilities to their firm.”

Last year saw the biggest increase in electronic trading, up to 41 percent of shares traded with bellwether firms auto-routing program trades and parent orders with share sizes of less than 5 percent of average daily volume (ADV). But as more of these firms sought to automate pieces of their order flow, the asset managers told TABB a quantitative overlay was critical. “This issue came up repeatedly in different forms, from portfolio manager alpha modeling, to venue analysis and internal routing optimization,” said Sussman.  

Among some of Tabb Group’s findings are: KEEP READING VIA TRADERS MAGAZINE