Global Spend on Trading Technology to Exceed $46 Billion in 2008

Global expenditure on trading and related technology and services reached an estimated US$45.8 billion in 2007, according to new analysis released by the trading technology and research services consultancy Kimsey Consulting.

The largest single country market is the US, accounting for an estimated 35% of total global spend. The second largest market is the UK, accounting for approximately 14% of spend.

In regional terms, Europe is the largest market, with an estimated US$19 billion being spent in 2007. In comparison, Asia/Pacific spent around US$7.5 billion.

Expenditure on applications and associated hardware and services, was an estimated USD$28.8 billion, almost three times the amount spent on information (market data, news, etc.). Expenditure on telecommunications (trading turrets, voice lines, recording, etc.) was an estimated USD$6 billion.

"Though growing economic uncertainty is likely to see mature markets remaining comparatively static, continuing development and expansion of financial, commodities and energy trading activity in emerging markets will support continued growth of the global market for trading and related technology and services", according to Stephen Kimsey, Principal of Kimsey Consulting.

This new analysis provides a breakdown of spend by key technology area for more than 50 individual countries and geographic regions. Analysis is derived from on-going Kimsey Consulting research - for instance the UK Dealing Room Survey, and the US Tri-State Trading Technology Study.

Looking forward, the expectation is for spend on applications to take an ever-increasing share of the trading technology budget. In part this will be due to the growing commoditisation of information, which itself is partly driven by enabling technologies such as the internet.

However the key driver for application spend is the continually evolving demand and requirement of the trading community. Trading is becoming increasingly reliant on applications, whether this be in the form algorithms, risk management, order management systems, back office, and even voice over IP. This is, of course, good news for those involved in the application and support area, though the question must, at some stage, be asked if this growing reliance on applications is good for the long-term health of the trading markets.

Global expenditure is expected to exceed US$46 billion in 2008, most likely driven by demand from developing markets. Asia/Pacific is expected to continue to be the fasted growing region in terms of trading technology expenditure, though South America and Eastern Europe will also be growing in their importance.

Stephen Kimsey is Principal Analyst at Kinsey Consulting
www.KimseyConsulting.com