Industry Updates

Massive Growth in Trade Automation, Hedge Funds to Hugely Outpace Traditional Buyside Firms: Automated Trader

Monday, January 30, 2012

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John Howard Opalesque Industry Update - Automated Trader, the world's leading journal of automated and algorithmic trading, has just published its Algorithmic Trading Survey Report. Based upon 515 responses from investment banks, hedge funds, traditional asset managers, market makers and proprietary trading firms, together with input from both niche and global brokers, the report provides definitive insights into the current and future trading practices of buyside and sellside firms globally.

Among numerous other unique data, the survey highlights massive growth in the scope and extent of automation - but with some striking disparities. An ever-increasing number of processes within the trade life-cycle are being automated. Within the next three years some 80% of hedge funds will have largely or fully automated their trading processes. Global investment banks present a similar picture, with 86% of them expecting to become either largely or completely automated over the same period. However, these statistics are in stark contrast to expectations at traditional buyside firms, where fewer than 14% expect to be able to achieve this.

"These results are hugely significant and are also very much in line with the empirical evidence gathered during frequent conversations with our readers over the past year," said John Howard, Publisher and CEO of Automated Trader. "Clearly we've now moved far beyond execution latency as the sole focus. Decision latency has been one area where significant progress has been made, but it's the automation of a myriad of other processes, both pre- and post-trade, where firms are reporting big gains. We believe that with efficiency pressures being felt across the entire trading community, traditional asset managers will be looking to close this gap as quickly as possible. The survey is unique because such comprehensive data on so many aspects of the trading value-chain offers firms an opportunity to benchmark their activity against some of the very best in the industry."

(press release)

Further details can be found here: www.automatedtrader.net/digital_editions/1/automated-trader-algorithmic-trading-survey-report

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