Proprietary trading firms increase technology spending

Proprietary trading firms are ramping up investment budgets in anticipation of another strong trading year in 2023, the latest Acuiti Proprietary Trading Management Insight Report found.

The report, which is based on a quarterly survey by Acuiti’s proprietary trading network, a group of more than 100 senior proprietary trading executives from around the world and produced in partnership with Avelacom, found that 68 percent of companies represented in the network were planning above-average technology investment budgets in 2023, while 25% said their budget would be significantly above average.

Will Mitting

Will Mitting, founder of Acuiti, said: “Proprietary trading firms are playing a critical role in providing liquidity in highly volatile markets. The expectation of solid corporate performance next year suggests that the volatility in global markets experienced during 2022 is likely to continue into the coming year. Companies are investing to remain competitive”.

“However, they won’t be immune from the rising costs of doing business, particularly with regards to salaries where shortages of skilled personnel in many jurisdictions are leading to significant wage inflation.”

The primary focus for increased technology spending will be to improve latency in existing markets, which indicates the growing importance of speed in times of volatile market conditions and liquidity droughts. Connectivity to new markets will also be an area of ​​investment focus.

Outside of technology, the main area that prop companies plan to invest in is headcount. Nearly 80% of the network plans to increase its commercial headcount next year. This headcount expansion is likely to exacerbate staffing shortages and wage inflation in most regions, as reported in the second quarter proprietary trading insight report.

The investment surge comes as firms anticipate another banner year for proprietary trading as volatility continues to impact global markets. Overall, 73% of the network forecast an above-average trading year in 2023, with 18% expecting their business to perform significantly above average.

Aleksey Larichev, co-founder and CEO of Avelacom, said: “This quarter’s survey results show that in times of volatility, traders see optimized latency as a necessity. The ability to trade as quickly as possible in fast-moving markets has never been more important.”

Download the full report here:

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