December 11, 2012 – Capital markets firms are being driven to improve efficiencies and reduce costs, rather than simply comply with new regulations, according to a new survey on technology spending.

“The respondents are looking for increased returns on investment through greater efficiencies and productivity,” says Ganesh Iyer, Senior Manager, Product Marketing, IPC Systems, which supplies communications gear to trading firms. “Only 17 percent said they were spending because of compliance'' with reforms being promulgated in the United States and Europe.

The IPC Trading Technology Investment Trend Survey, conducted at the end of October, polled more than 100 executives at global trading firms with nearly a quarter consisting of top-level executives and 87% having approval or influence on technology spending decisions.

  • 45 percent of respondents view desktop trading applications as an area of investment in 2013.
  • 28 percent of respondents are seeking apps that offer greater collaboration between on/off floor traders and support staff.
  • 100 percent of respondents either have, or are implementing or will implement in 2013 a cloud-based infrastructure on the trading floor.
  • Nearly a third of firms say they will make investments to make traders more mobile and in doing so expect to see significant benefits in terms of efficiency, regulatory compliance or competitive advantage.

Respondents also said increased mobility is important in enabling traders to continue working through disaster recovery, Iyer says. Ironically the survey was conducted at FIA Chicago during Hurricane Sandy.
More than three-quarters of respondents said their firms are increasing their trading technology spending in 2013, while only two percent indicated they are cutting spending. Nearly half of firms said they will invest in technology to support electronic trading, but only 12 percent said it was their top priority. Forty percent of firms said they will be investing in technology for traders and the trading desk. Overall, 30 percent said this area was their top priority.

Other areas named as top priorities were technology for back offices, named by 16 percent, network infrastructure, also named by 16 percent and trading support technology with 14 percent. High frequency trading was named as a top priority by 12 percent and algorithmic trading by 11 percent.

Firms are also looking to that new technology to be app-driven to help drive efficiencies and competitiveness. Fifty-one percent of respondents cited applications that offer greater integration of market data and trading communication systems as a key tool for success in 2013. “There’s an awful lot of data out there, and trading firms want to be able to make sense of it,” says Iyer.

This story originally appeared at Securities Technology Monitor.

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