The number of traders employed in the City of London will have fallen by a massive 90% by 2015 because more banks are moving towards all-electronic algorithmic trading operations, according to a white paper released by IBM.The uptake of algorithmic trading, which is conducted by computers and requires little manual input or supervision, has major implications for skills and the local economy in the City as employment levels will fall dramatically.
IBM forecasts that by 2015 nine out of ten traders currently employed by financial firms will have lost their jobs due to adoption of automatic algorithmic trading.
Banks already employ more IT staff than traders, says IBM, and algorithmic trading is set to dominate the market going forward. Banks will continue to recruit programming staff to develop more complex algorithms and compete with powerful technology.
IBM says in the algorithmic race, the winners will be those with the ability to reduce latency (the time it takes to react to changes in the market and execute a trade) to an absolute minimum.
Despite these changes the white paper says London will continue to be a key international financial centre.
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