Brokers are undergoing a “Darwinian evolution” as a result of demands from their buy-side clients and their own internal challenges stemming from the global financial crisis, according to a new report from Celent, a research and advisory firm.
The report, ‘Capital Markets 2.0: The Future of Institutional Brokerage and Market Making Operations’, found that broker-dealer revenues fell 39% in 2008 compared with 2007, and that bets in the sub-prime and fixed income, currencies and commodities markets accounted for 20% of the overall decline.
At the same time, the buy-side has become more demanding. The report notes that unprecedented levels of volatility have challenged many buy-side models and choice of algorithmic trading tools. As a result, buy-side traders are now requesting more customised, easily integrated and flexible tools to navigate the changing environment.
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