Buy Side Leans Towards Human-Driven, Alternative Trading Models

Although more buy-side firms than not want to boost their use of automated trading in the next year, a survey by MathWorks shows nearly a third have taken the opposing view.

Buy-side firms are somewhat divided on how much of their trading they want automated, according to a survey conducted by software developer MathWorks.

In interviews with 43 participants from the buy side, sell side, and academia, MathWorks said it found that 46 percent of buy-side firms are looking to boost their automated trading in the next 12 months. But 31 percent of the buy-side firms surveyed are looking to do the opposite, and decrease their use of automated trading over the next year in favor of alternatives, according to the survey, whose respondents had an average of $483.2 billion in assets under management.

"Automated trading is a topic of ongoing debate, with nervousness around potential repeats of the 2012 flash crash and recent market-impacting bad trades," said Steve Wilcockson, an industry manager at MathWorks.

"The buy side is leaning towards bespoke, human-driven alternative trading models. A significant conclusion of our research is that the buy and sell side agree that more robust and faster implementation of trading – and risk – models is key to better market performance."

Overall, 59 percent of all financial institutions are looking to boost their level of automated trading during that period, with 67 percent of the sell side taking that view, MathWorks said.

A full report on the findings will be published in November, the firm added. As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio