Robots are coming for traders’ jobs, ‘Electronification’ is pushing into all corners of the market and human beings are being rendered either obsolete or relegated to roles as technicians or stewards for the new technology.
Which traded products are most and least affected by the march of the machines? Research firm Greenwich Associates has compiled the chart below, based upon the penetration of electronic trading in the U.S. market. Index-based CDS trading involving institutional investors is almost entirely performed by machine. So is FX trading. High yield corporate bonds are almost entirely traded by humans.
Source: Greenwich Associates
Of course, this doesn’t mean that that traders of high yield and investment grade corporate bonds are safe. Just that electronic trading systems haven’t made much headway into their areas yet. The quiet shelving of Goldman Sachs’ G-Sessions electronic bond trading platform last year might suggest systems won’t make much progress in future. Except that independent bond trading platforms like Trumid are coming from behind to ensure that electronification happens in future.
Photo credit: Justin Morgan