The traders with the best (and worst) job security
Much noise has been made about the slow extinction of credit traders in the face of electronification. It’s a well-documented phenomenon, especially in fixed income trading, but it’s worth asking: how does the need for human connection affect the rest of the sales & trading sector?
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A new report from market intelligence provider Crisil Coalition Greenwich (CCG)could provide an answer. CCG polled 68 buy-side traders to ask them whether they preferred coverage form an asset-class-specific desk or a multi-asset desk when trading 11 different products.
CCG treated single-asset desks as human-run desks, and multi-asset desks as being electronified. It did not explicitly state this, but it is made clear through the text, contrasting workflows being "more electronic and automated" with "asset class specialists" possessing "deep human knowledge".
The results varied significantly. Generally, the traders preferred dedicated coverage desks populated by humans for most products; on the most extreme end, 80% and 79% preferred dedicated coverage for commodities and equities trading, respectively.
The only exceptions were for crypto/digital assets and structured products. Other results were nearer to a 50/50 split, such as for exchange-traded funds, where 51% preferred a focused desk and 49% preferred a multi-asset desk.
The distinction matters because a multi-asset desk is more likely to be electronic, or to rely more on electronification due to varying market structure and liquidity and the likes.
However, just 49% of traders noted that finding liquidity was “the most” important attribute in a sell-side partner; but only 38% noted that finding liquidity was a frequent “pain-point”. It was the most frequent pain-point for traders.
Crisil Coalition Greenwich noted that buy-side traders do not see technology as a substitute for specialization. “Clients seek integrated platforms and simplified workflows, but they also want access to experienced professionals who can interpret market conditions, guide execution in less routine situations and provide informed coverage across asset classes.”
We’ve noted the full by-sector results below. The read is not as simple as “multi-asset desk preference means high degree of electronification”, but it is a good proxy.
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