of the survey. It seems thathowever sophisticated thealgo offering, the end resultfor the trader remains thesame. The one aspect of service that no longer elic-its the attention it receivedin 2008 is cost, once theoutstanding preoccupationof respondents (though tellthat to the head trader of amajor long-only firm inthe UK for whom the big-gest change in algo per-formance was the increasein price over the last six months).Overall, the survey found that close to one inthree buy-side traders isnow using algorithms totrade more than 40% of equities order flow, up fromone in four a year ago. In2008, when the survey began, fewer than one in 10respondents used algo-rithms for such a significantproportion of order flow.While this gives a clear indi-cation of the growingmaturity of buy-side tradersas loyal anddiscerning consumers of brokers’ electronic tradinggoods, it also hints at a reli-ance on algorithms to ‘clearthe noise’ during recentperiods of pandemoniumin the market.
Market volatility appearedsomewhat of a ‘double-edged sword’ for algo usersin 2009. While a number of respondents observed that itled to greater dependence on
01234560123456Internal crossingResults vs pre-trade estimatesEase of useCustomisationPrice improvementAnonymitySpeedCostExecution consistencyReduce market impactImprove trader productivity
7 = Excellent 1 = Very weak
Other: 12.4%Speed: 9.4%Ease of use: 7.5%Price improvement: 6.0%Reduced market impact: 14.6%Execution consistency: 9.0%Trader productivity: 15.0%Anonymity: 12.0%Cost: 14.2%
One in three buy-side traders is now using algorithms totrade more than 40%of equities orderflow.