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Feature: The final curtain
01 December 2006
Traders must have long ago become used to being referred to as an endangered species. Algorithmic trading is just the latest in a long line of spectres threatening to flood the job market with former masters of the universe. Mike Topping reports
Machines, the theory goes, are now cheaper, faster, more reliable and more effective than human beings at trading in today's electronic marketplaces. Those traders not directly replaced by machines will be unable to compete and consequently driven out of the market.
Some of the headlines prompted by that school of thought will have made pretty bleak reading for anyone looking to trading as a long-term career. IBM has predicted trader numbers will be slashed by a massive 90% by 2015, citing algorithmic trading as a prime culprit.
"We do see a steep reduction in trader numbers," says IBM's Keith Bear, one of the authors of the firm's report: Tackling latency - the algorithmic arms race. "There are many examples, although much of that has been on the cash side rather than the derivatives side."
Algorithmic trading is indeed a more established force in cash equity markets. Bear's report estimates that of...
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