Financial Insights Predicts Uneven Growth for Algorithmic Trading Providers
FRAMINGHAM, MA – FEBRUARY 9, 2005 – Leading independent research and advisory firm, Financial Insights, today released a new report detailing the opportunities and growth potential in Algorithmic Trading. The report describes algorithmic trading services, or rules-based trading, and identifies the high level of competition between providers, the key differentiators, and recommendations as to how firms can gain competitive advantage to build and market the ultimate trading tool.
resides in the medium to smaller size broker/dealers. These firms need algorithmic capability in order to maintain market share and compete technologically. This means that larger brokers and independent software vendors (ISVs) that can "white label" their algorithmic trading technologies have a ready market. Financial Insights estimates that over 95% of algorithmic trading activity is derived from either hedge fund managers or broker/dealers and questions the actual speed of adoption among the various user groups. The report states that hedge funds account for approximately two-thirds of the brokerage clients using algorithmic trading while traditional buy-side institutions make up 5-10% of algorithmic trading clientele with broker/dealers making up the balance. In spite of the very modest uptake by buy-side financial institutions to date, there continues to be a strong push in development of algorithmic trading tools by brokers and ISVs alike.
"Hardly a month goes by that another brokerage firm or software vendor does not make an announcement of their entry into the algorithmic trading arena," points out Randy Grossman, research manager, Institutional Trading and Investment Management at Financial insights. "The scramble by sell-side firms to develop algorithmic trading tools coupled with DMA in recent months is a bright spot in IT spending in a year that has not really lived up to expectations in that regard. Algorithmic, or rules-based trading, once a territory prowled only by sophisticated statistical arbitrage funds, has hit the mainstream big time."
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About Financial Insights, an IDC Company
Financial Insights provides independent research, custom consulting, and detailed multiclient studies on the technology issues and challenges facing the financial services industry. Our global research covers topics of strategic importance to corporate and retail banks, insurance carriers, asset management firms, securities and brokerage firms. Our local practices in Asia Pacific, Europe, Latin America and Canada add an in-depth regional viewpoint. Financial Insights, an IDC company, is headquartered in Framingham, Massachusetts, USA. IDC is a subsidiary of IDG, the world's leading IT media, research, and exposition company. For more information visit: http://www.financial-insights.com .
Financial Insights, an IDC company Deborah Stark, 508-935-4318 firstname.lastname@example.org