Trading Technology Growth Slows

Over the next few years, the buy side will continue to spend on trading systems, but growth in the trading technology market is expected to slow down to an average annual growth rate of 4.6 percent, according to a new market review by Celent. The Boston-based analyst expects spending on asset management trading systems, currently at $634 million annually, to grow to $757 million by 2010.

The market is reaching saturation with current products, and as vendors move downstream to capture small and midsize clients, they will cut the prices of their solutions, Celent reports. While Celent predicts that hedge funds with more than $2 billion in assets will continue to improve their infrastructures, and while they may decide to add third-party trading and core systems, the firm says many are building their own, citing the prohibitive cost and multitude of vendors required to construct the ideal infrastructure.

Celent also expects the convergence of order management systems, execution management systems and risk/trading solutions to continue. Through either development or acquisition, the market likely will see an "all-powerful" multi-asset-class trading system in three to five years, the firm predicts. <<<