WESTBOROUGH, Mass. — More than half of money managers in Europe, Asia and Canada want to use electronic trading methods but just 7% do, largely because of problems with connectivity, according to a new report on global trading.
Still, that level is forecast to reach 21% in 2007, led by Europe.
"The actual numbers are not that surprising — 7% use low-touch trading. I don't think too many people would be shocked by that," said Robert Iati, author of the report and partner at Tabb Group LLC, Westborough. "But 55% of the folks said they preferred to use low-touch methods and that begs the question: Why aren't they?"
The reasons, he said, include fragmented markets with different regulatory structures and rules, a lack of connectivity among markets, and money managers' own sluggish adoption of order-management systems and other technology necessary for electronic trading.
"We grouped the report by major geographies — Europe, Asia and Canada — but in fact those markets are not regionally grouped, they're fragmented," he said. "Asia is Tokyo, Hong Kong, Singapore, Australia and all the smaller markets — the governance structure of all those is quite different and might never be the same."
He called connecting markets that operate under different regulatory structures "a significant hurdle," but said it could be overcome by pressure from money managers for better access and efforts of their brokerage firms to provide the linkages.
For money managers, one of the driving forces behind their growing interest in electronic trading technology is finding liquidity.