One day, the buy side will need algorithmic traders

They might be fairly late to the party, but the buy-side is taking an increased interest in algorithmic trading. But, while they may be making some tentative steps towards it, hiring has yet to take off in any significant way.

With MiFID spurring more fragmentation and ever-increasing levels of market volatility, fund managers are using algorithms to employ more aggressive execution strategies.

As Dmitri Galinov, a director for advance execution services at Credit Suisse told Financial News: "We have seen a change in behaviour in the types of algorithmic strategies the buy side is using. Historically the buy side was much more passive than the sell side, but they are becoming more aggressive - especially towards the end of the day."

But this increased activity from the buy side has yet to really create an appetite to hire, says Marcus Newman, director and specialist in the electronic, algorithmic and program trading markets at recruitment firm Riversdale Consulting.

"The buy side is undoubtedly looking to take more control over their execution capability," he says. "But they simply don't have the budget to take people on. I've pitched a number of top sell side people to some large buy side players, but the money required to hire isn't there at the moment, even if the appetite is."

Newman is, however, anticipating this to be an active area once headcount freezes are lifted, and says that sell side expertise is increasingly willing to make the move to a buy side firm.

"They view it as a growing area and a place where their expertise is likely to be in demand in the future. And with investment banking bonuses obviously much lower than in previous years, the buy side looks like an increasingly attractive option."