The work-day of a buy-side trader is not what it once was. Not long ago, much of their time was spent researching stocks and chatting with dealers on the phone or through Bloomberg terminals – and of course making trades. But changes in technology and greater oversight has altered how traders spend their day. If nothing else, working on the buy-side may have become less interesting.
New research from Greenwich Associates shows that traders and portfolio managers are spending significantly more time trading electronically than they did a year ago – something that shouldn’t come as any sort of surprise. Growth of electronic trading on the buy-side has increased massively over the last five years. More than half (54%) of traders and PMs said they spent more time trading electronically in 2018 than they did the previous year, with only 5% cutting back.
As you can see in the two charts below, the real eye-popping changes concern functions that aren’t directly related to trading. Roughly 47% of respondents said they spent more time talking to compliance in 2018, while 45% had to allocate more of their day reviewing transaction cost analysis (TCA) or other best-execution metrics. Another 30% spent more time on “desk oversight,” which is probably a bit low considering the survey included traders who weren’t leading a team. Greenwich Associates expects TCA usage to increase in 2019 as more FX and cash fixed income desks are obliged to perform the analysis.
Meanwhile, roughly 55% of respondents said they spent less time on the phone with dealers in 2018 than they did the previous year. Only 6% said the opposite. There seems to be a lot less action on the buy-side these days, unless you count conversations with compliance as action.