Why UK equities traders have better job security than traders in Paris
If you’re in sales & trading, you might be worried about the constantly encroaching 'algorithmication' that’s taking over the industry. You’d be right – but depending on where your office is, you might not have to be that worried.
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A recent report from market intelligence firm Coalition Greenwich says UK equities traders are turning out to be much, harder to replace than Continental European ones. The reasons for that are complex, however.
Continental equities traders are “further along in their algorithmic trading journey,” says Coalition Greenwich. It predicts that algo penetration of the UK equities trading mix will rise to just 37% in 2027, from its present 35%; the Continental trading mix is expected to rise to 42% in 2027 from its present 36%.
Why? One trader told Coalition Greenwich the UK simply doesn’t have a deep enough order book (volume, essentially) to support electronic trading.
There was also resurgence in human-executed (also known as high-touch) sales & trading between 2023 and 2024 in the UK. High-touch trading went from 34% of executed trades to 39% during that period. Coalition Greenwich put this down to the UK election, when traders needed to adjust portfolios into mid-cap equities that require more human input than large-cap equities.
Despite that, Coalition Greenwich expects high-touch trading in the UK to be 35% of the market by 2027. In Continental Europe, it's forecasting 24%.
Electronification is clearly moving at a slower pace than previously predicted. The 35-36% of equities trading that was electronically executed in the UK and Europe across 2024 was significantly behind the 38-40% that traders interviewed predicted for that year back in 2021.
Either way, there is a ceiling to algorithmic potential – some products are simply too difficult to electronify. Over on the credit side, high-yield trading has proven its resilience in the US; mostly because it’s the type of volatile market that Barclays has pointed out as resilient to change in the past.
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