September 12, 2023 | Stamford, CT — Boutique institutional equity investors are less-than-satisfied with the support they are getting from their trading technology providers, but fears of the potential disruptions associated with a change in vendors often cause them to stay the course with current partners.
Roughly two-thirds of the equity-focused buy-side firms participating in a recent study from Coalition Greenwich considered changing trading technology providers in the past year. These deliberations were driven by the desire for better customer service, improved trading and analytics capabilities, and enhanced data and reporting functionality.
Despite their lack of satisfaction with current providers, only one-in-10 followed through and switched vendors. Firms that opted to stick with current providers after contemplating a change said their decisions were based on concerns about the time and costs of integrating a new trading platform with existing workflows and systems.
As businesses and technologies evolve, a “buy, build and integrate” approach is gaining traction. Buy-side firms are increasingly leveraging a pre-built foundation that can be expanded and tailored through additional development or integration with internal systems, granting them greater control, flexibility and adaptability while reducing overall development time and costs.
“Trading technology is the lifeline of asset managers, the pulse of their operations and the driving force behind their competitive edge,” says Jesse Forster, Senior Analyst at Coalition Greenwich Market Structure & Technology and author of Trading Technology Unveiled: Insights into Buy-Side Behaviors and Priorities. “As firms work to transform these critical systems, their choice of external partners and providers will have far-reaching consequences.”
Increasing Importance of Third-Party Technology Providers
The performance of external technology partners is of critical importance to buy-side firms as many are in the midst of technology overhauls designed to enhance the efficiency of the platforms that support trading and other core functions. For example, more than half of the buy-side firms taking part in the Coalition Greenwich study name enhancing middle- and back-office processes and technology as a top strategic priority for their organizations.
According to these firms, the ideal trading technology solution combines efficient performance, multi-asset-class trading capabilities, and integration with other trading platforms or brokers. Seamless integration and customization options are crucial for success.
“Third-party technology providers are becoming increasingly essential and providers that prioritize ease of use, scalability, customization, comprehensive training, and high-quality support will unlock growth opportunities and establish trust within the industry,” says Jesse Forster.
Trading Technology Unveiled: Insights into Buy-Side Behaviors and Priorities analyzes the top priorities of equity-focused buy-side firms when it comes to their technology platforms and providers and provides recommendations on how technology providers can maintain existing relationships and capture new business.