The buy-side continues to hike its technology spend as it seeks to find liquidity and exploit it wherever it can.
According to its latest research, market consultancy Greenwich Associates released a new report noting the buy side modestly increased its 2019 trading budget to $2.2 million—a 4% increase from 2018.
Tracking the relative significance of liquidity challenges by market (more on this shortly), fixed-income trading desks have the largest 2019 budget: $2.8 million. Equity trading desks’ budgets average $1.8 million, while FX desks have an average budget of $1.6 million. Despite significant investment already, trading desk budgets continue to rise, albeit slowly, especially when considered in aggregate. Seventy percent of desks saw their
2019 budget increase by less than 10% from 2018.
Decreases in annual budget by some of our study respondents tended to reflect changes in headcount, as all desks with a year-over-year budget decline saw headcount on the desk decrease as well. Significant budget increases are generally spurred by change—whether that’s upgrading tools or adding new regions or asset classes—but typically, an increase in headcount does not drive budgets upward. Put simply, cutting costs
means cutting people, while investing means adding tech.
In Q4 2019, Greenwich Associates interviewed 349 buy-side traders in the Americas and EMEA working on equity, fixed-income or FX trading desks. Respondents were asked a series of questions focusing on changes in market structure issues across asset classes, trading desk budgets and staffing, as well as technology usage, including OMS, EMS and TCA tools.
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