Global Market for Trading Technology Forecast to Lose almost 12,000 Trading Positions by 2011 - 20,000 Fewer Trading Positions in US and Western Europe
28th April 2008 - By 2011 there are forecast to be around 12,000 fewer trading positions globally, according to a new report and analysis from Kimsey Consulting - Global Market Analysis and Forecasts – Trading Technology.
Continuing fall-out from the US sub-prime mortgage market, and collapse of the credit markets are key factors driving change in the global market for trading technology, particularly in North America and Western European where markets are forecast to have 20,000 fewer trading positions by 2011.
The extent of the forecast reduction would be significantly larger if not for continued expansion of financial, commodities and energy trading sectors in regions such as Eastern Europe, the Middle East and Asia Pacific.
The global market for trading technology currently consists of more than 65,000 firms and more than half a million trading positions, worth an estimated US$70.5 billion in 2008.
Despite a reduction in the number of users, greater reliance on technology and increasing sophistication of solutions will lead to an increase in global expenditure of 4.3% over the same period though growth in the US (the world’s largest market) is forecast to be lower at around 2.5%.
The global value of the trading information sector (including price data, news, etc.) is forecast to grow by almost 9%, to reach an estimated US$16.3 billion, albeit lower in value than the US$47 billion value of the Trading Applications sector (forecast to grow by around 3% by 2011).
Kimsey Consulting’s 185+page report and analysis provides detailed current and forecast market size and values for trading technology, across more than 50 countries, in addition to regional data for; North America, Central/South America, Europe, Middle East, Africa and Asia Pacific.
“This analysis highlights the significant global variations that exist in relation to size, structure, value and the rate of change for the market for trading technology”, comments the report’s author Stephen Kimsey. “In an increasingly competitive and global market, technology providers need to understand not just their existing markets, but increasingly where future opportunity will exist”.
Mixed Outlook for UK Trading Technology Vendors in 2008
UK spend on trading technology forecast to reach £3.4 Billion
4th December 2007 – Expenditure on trading technology in the UK is forecast to reach £3.4 Billion in 2008, according to the 20th annual UK Dealing Room Survey, published by Kimsey Consulting. The survey forecasts an overall rise of around 4% in 2008, compared to the estimated 10% increase in 2007.
Key drivers in 2007 were growth in trading volumes (3/4’s of firms surveyed reporting growth), and growth in the number of trading positions (more than half of firms surveyed reporting an average rise of 10%).
The outlook for 2008 is mixed, with just under half of surveyed firms uncertain as to staffing levels in the coming year (on and off the trading floor). Spend by larger trading operations is forecast to be flat, whilst smaller trading operations (~100 trading positions) are expected to continue investment, particularly in trading and support applications (now accounting for more than 1/3rd of technology spend).
Independently researched and published by market research and advisory services company Kimsey Consulting, The 2007 UK Dealing Room Survey provides a detailed review of the state of the trading technology sector in one of the worlds leading financial trading regions, providing coverage of a wide range of topics, from the dynamics of the trading environment, through technology sectors such as market data, newswires and applications, and data such as market share, customer satisfaction, purchasing intentions, etc.
Survey respondents (including both end-users and technology management), named Bloomberg as the overall best trading technology vendor.
Vendors Achieving Higher Levels of Customer Satisfaction
Market Data - Bloomberg, GL Trade
Newswires - Dow Jones
Trading Turrets - IPC
Trading Platform - FxAll
Trading & Risk Management - Sungard FRONT ARENA, Reuters
Portfolio & Asset Management - DST International, Sungard
Analytics - MarketIT, Trading Technologies
Back Office - Wall Street Systems, Financial Objects
Source; Kimsey Consulting – UK Dealing Room Survey - 2007
Spend on Trading Applications and Telecoms/Turrets Up 10% p.a. In New York Region. Total Trading Technology Spend - US$5.9 Bn - Growing at 5% p.a.
Monday 16th July 2007 – Expenditure on Trading Applications and Trading Telecoms/Turrets is rising at 10% p.a., according to the latest Kimsey Consulting US Tri-State Trading Technology Study. Total spend on trading technology in the New York Tri-State region is now 5% higher than 12 months ago, running at an estimated USD$5.9 billion p.a.
Independently researched and published by market research and advisory services company Kimsey Consulting, The US Tri-State Trading Technology Study provides a detailed review of the state of the trading technology sector in one of the worlds most important financial regions.
Trading technology expenditure in the New York region is forecast to continue growing in the coming years, driven in part by the increasing number (around 20% over the next 18 months) of trading operations now entering a technology refit/upgrade stage.
The US Tri-State Trading Technology Study covers a wide range of topics; from dynamics of the trading environment, through technology sectors such as market data, newswires and applications. Amongst the 60+ survey questions, respondents are asked to score their satisfaction with vendors/solutions used. Vendor Achieving Highest Customer Satisfaction
Thomson Financial – “Big 3” IP’s
GL - Overall
Dow Jones Newswires
Trading & Risk Management
SunGard Front Arena
Portfolio & Asset Management
SunGard Asset Arena
Source; Kimsey Consulting – US Tri-State Trading Technology Study - 2007
Amongst other findings in the 1100+ page study:
§ Voice trading accounts for just over half of transactions, marginally down on 2006
§ Continued growth in trading volumes particularly amongst larger trading institutions – apparently taking an increasing share of market – algorithmic trading a clear driver
§ Almost three quarters of firms now regard Voice over IP as a suitable technology solution for the trading floor, compared to around two-thirds in 2006.
The most important source of information on trading technology is “Word of Mouth”.
Expenditure on Trading Technology to Exceed £3 Billion in UK - Survey Forecasts Continued Growth in Demand for Trading Technology
6th July 2006 – Expenditure on trading technology in the UK is set to rise above £3 Billion p.a. according to the annual Kimsey Consulting UK Dealing Room Survey. Expenditure on applications has risen 10% year on year and now accounts for around one third of the annual trading technology spend, exceeding expenditure on data services, which accounts for around 30% of the annual trading technology budget.
The UK Dealing Room Survey predicts increased demand for trading technology from lower and middle tier institutions, and investment priorities to include eTrading, compliance and integration.
The UK Dealing Room Survey is produced by the independent market research and advisory company Kimsey Consulting (www.KimseyConsulting.com), and analyses detailed interviews conducted with end-users and management at trading operations whose total number of trading positions equated to around one-quarter of the UK market.
In the £1 billion p.a. applications sector SunGard’s FRONT ARENA subsidiary achieved the highest customer satisfaction rating in the Trading & Risk Management segment. SunGard also achieved the best ratings in the Portfolio/Asset Management and Back Office segments.
The market data segment is dominated by the presence of Bloomberg and Reuters, though third place Thomson Financial is shown as having an increasing presence, as are information providers such as Proquote, Comstock, CQG and the likes of GL Trade and EBS.
In terms of customer satisfaction ratings Bloomberg tied with EBS for the best overall score, though Reuters was judged to be the best in terms of timeliness of data, the criteria judged by survey respondents as being the most important. GL Trade also featured as a best performer, achieving the best score for after-sales support.
In the newswires segment Dow Jones Newswires achieved the best overall customer satisfaction rating, topping all criteria with the sole exception of breadth of news coverage, where the best score was given to Reuters. Dow Jones Newswires has now received the best customer ratings for both the UK and US (tri-state) markets.
In the UK Trading Turret sector, BT and IPC are the dominant vendors. The 2006 UK Dealing Room Survey also shows that there is increasing acceptance of Voice over IP, with more than 70% of those interviewed regarding VoIP as being suitable for the trading environment. Increasing acceptance of VoIP will create new opportunity for the traditional vendors as well as for newcomers such as IP-Trade.
In terms of customer satisfaction, IPC achieved the best overall rating in the UK and US, with BT sharing best score for reliability with Orange Business Services, Trading Solutions (the new name for Etrali), the latter also achieving the best rating for after sales support.
Amongst other findings from the 1000+ page study:
The UK market for trading technology includes around 740 trading operations and 36,000 trading positions on the sell-side, and is the largest country market for trading technology outside of the US. (For comparison there are an estimated 1,600 trading operations and around 67,000 trading positions in the New York region.)
Expenditure on trading technology in the UK breaks down as follows; Market data (including news, etc.) 29%, Applications 32%, Hardware 11%, Telecoms 14%, Other 14%.
The general trend in the level of trading transactions (measured by volume not value) continues UP – and is estimated to be have grown at between 5~10% over the last year.
e-trading continues to take an increasing share of trading transaction volumes (estimated to have grown around 10% over the past year) – though voice trading continues to playing an important role – with just under half of survey respondents saying that voice trading levels are either the same or marginally ahead of 2005.
Microsoft continues to be the defacto standard for the trading desktop, though alternative operating systems (including Linux) were used to some extent by around 40% of firms surveyed.
Dell is the most widely used provider of desktop computer hardware, though just under 90% of firms surveyed were also using hardware sourced from other manufacturers.
Most widely used Network service provider – BT Radianz.
Just under half of firms not currently using Storage Area Networking have plans to implement in the near future.