Buy-side desks are dropping high-touch sales traders in favour of algos for their programme trading (PT), Coalition Greenwich has found.
While PT’s share of the market has remained static at 13% year-on-year (YoY), representing approximately US$79 billion of average daily volumes, the degree executed electronically has risen from 35% to 46% since 2022.
Within PT, 26% of volumes use single-stock algos designed to trade lists. The remaining 20% use PT-specific algos. These volumes have been gradually increasing since 2020, then sitting at 18% and 16% respectively.
The former are becoming more sophisticated mechanisms, Coalition Greenwich stated, able to execute baskets as single orders. Survey respondents added that they were hesitant to introduce new, programme-specific algos when their clients were happy with existing mechanisms.
When choosing an agency PT platform, survey participants cited the minimisation of market impact as their greatest deciding factors. Sales coverage and electronic trading capabilities were also prioritised by a total 53% and 27% of respondents respectively.
A number of those polled noted that smaller brokers are losing out on market share as larger banks offer more advanced PT technology solutions.
Although the direction is electronic, high-touch sales traders still have a role to play in the PT landscape. Survey respondents acknowledged their importance in PT with non-US constituents, owing to stronger local market understanding. Internally to the US, their value is diminished.
