to all relevant liquidity pools and to guarantee best execution is achieved for their end clients . With this , sell-side firms are diversifying their offerings to meet these shifting demands .
“ The buy-side pay all the bills in the industry - they decide whether they self-execute or execute through the sell-side . The decision process , in reality , is always with them . The more confidence the buy-side has in executing trades , the more the shift will continue ,” argues Keith Todd , chief executive at Trading Technologies .
“ There are , however , occasions where even if you ' re a sophisticated buy-side trader , you may choose to use the sell-side because it gives you different windows and access to the market .”
Technology isn ’ t the only differentiator , Todd adds . “ It ' s training , experience and the circumstances .”
Evolving reliance on the sell-side Buy-side reliance on the sellside has shifted thanks to the rise in a more independent and data-driven approach to decision-making . Advanced analytics , direct market access , and AI-powered tools have given buy-side institutions the ability to carry out functions traditionally handled by the sell-side , such as research and trade execution .
“ Already electronic execution and direct market access has reduced the reliance on sales traders to source liquidity ,” emphasises Scott Chace , head on trading for portfolio solutions at State Street . “ Artificial intelligence will likely cause an increase in the use of sophisticated technology where traders ’ jobs are supplemented by machines and trades will simply be monitored by human traders . The reliance of traders as we know is likely to reduce over time as one trader will be able to efficiently handle a large number of transactions .”
In some cases , this shift of duties has reduced the buy-side ' s reliance on sell-side expertise , allowing for greater autonomy in investment strategies . As a result , the sell-side has begun to offer value-added services , including bespoke analytics and strategic
14 // TheTRADE // Q3 2024