Proprietary Trading Firms Boost Tech Spending

The latest Acuiti Proprietary Trading Management Insight Report finds that proprietary trading firms are increasing their investment budgets in anticipation of another strong trading year in 2023.

The report, based on a quarterly survey of Acuiti’s Proprietary Trading Expert Network, a network of more than 100 senior proprietary trading executives from around the world and produced in partnership with Avelacom, found that 68% of the firms represented in the network are planning for 2023 of technology investment budgets are higher than average, while 25% of respondents said their budgets will be significantly higher than average.

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Will Mitting, founder of Acuiti, said: “Proprietary trading firms play an important role in providing liquidity in a highly volatile market. Expectations for a strong business performance next year suggest that volatility in global markets in 2022 may continue into next year.” Investing is being made to stay competitive.”

“However, they are also not immune to rising costs of doing business, particularly in terms of wages, which have risen sharply due to shortages of skilled workers in many jurisdictions.”

The main goal of increased technology spending will be to improve latency in existing markets, suggesting that speed is becoming increasingly important in times of market volatility and drying up liquidity. Connectivity to new markets will also be a key area of ​​investment.

Outside of technology, the main area the prop company plans to invest in is headcount. Nearly 80% of networks plan to add trading staff in the next year. This headcount increase is likely to exacerbate the staffing shortages and wage increases reported in most regions in the second-quarter Proprietary Trading Insights report.

As volatility continues to impact global markets, firms forecast another bumper year for proprietary trading, with investments ramping up. Overall, 73% of networks predict above-average deals in 2023, and 18% expect their businesses to perform significantly above average.

Aleksey Larichev, co-founder and managing director of Avelacom, said: “This quarter’s findings show that in times of volatility, traders believe that optimizing latency is necessary. The ability to trade as quickly as possible in a rapidly changing market has never been more important .”

Download the full report here:

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