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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: westpacific who wrote (72275)	10/18/2006 2:21:46 PM
From: regli	Read Replies (1) of 110194

Computers to replace city traders by 2015? silicon.com Robo-trader on its way By Tim Ferguson Published: Tuesday 3 October 2006 The robots are on the march and there could be little that City traders can do about it. Research from IBM has predicted that by 2015 there will be 90 per cent fewer traders employed by the top investment banks as they lose their jobs to computer systems. In what IBM has dubbed the "algorithmic arms race," investment banks are trying to implement the fastest and most sophisticated systems in a bid to secure an advantage. The systems which are being increasingly used in investment banks and stock exchanges work to a set of rules or algorithms that allow them to respond to changes in market conditions and make the most profitable trades. Already the London Stock Exchange is increasing the capacity of its systems to cope with a big increase in algorithmic trading. Speed is one of the biggest advantages that these computerised systems have over human traders - as well as the ability to operate around the clock, without wages. But the threat of being replaced may be smaller for higher level traders who take strategic risk positions that computer systems are less able to determine. And Chris Skinner associate director of analysts Tower Group said trader-less exchanges won't be appearing any time soon. He told silicon.com: "Twenty years ago, people were predicting paperless offices and cashless societies. They haven't happened and neither will trader-less stock exchanges." The predictions made by IBM, are "possible but not probable", he said. Skinner added: "Most business is between people, not machines. There may be a 20 per cent fall in the number of traders in five years and possibly 30 per cent in 10 years' time." But Skinner acknowledges traders will need to become more sophisticated if they are to survive - and he said there will be a "stripping out of the gene pool" as those unable to cope with new demands fall by the wayside.

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