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May 9, 2008

Sellside and Buyside Have Different Views on Speed

By Peter Chapman

Faster trades. The buyside wants them. The sellside doesn't see the value. That's one of the conclusions of a new survey released by the Securities Industry and Financial Markets Association (SIFMA) covering electronic trading of equities in Europe.

In general, the buyside and sellside agree on the major challenges facing buyside desks, including, access to liquidity and EMS/OMS integration.

But when it comes to speed, their world views diverge. Nine percent of the buyside maintain improving the speed of execution is a major challenge. Zero percent of the sellside share that opinion.

Similarly, when it comes to choosing an electronic trading platform, both the buyside and the sellside agree the most important factors are access to sources of liquidity and the range of products offered.

But a closer look reveals about 20 percent of buyside believe speed is an important issue when choosing a trading platform. Only two percent of the sellside cited speed as relevant.

Speed of execution was also a point of contrast when the topic was improvements to trading platforms. About 11 percent of the buyside wanted faster systems. No firms on the sellside considered faster trades to be a noteworthy goal.

The sellside's priority, according to the survey, is to increase the number of products on their trading systems. The buyside, by contrast, wants to see improvements across the board. Besides speed, that includes market data and analytics, more asset classes, lower costs and more robust technology.

The survey was conducted for SIFMA by Concise, a British consultancy. It polled 94 buyside traders and nine brokerage firms. It found that half of the buyside respondents deliver the vast majority of their orders to the sellside electronically.

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