Self-directed professional traders assess market at RBC
Capital Markets forumRegulatory changes, capital needs, algorithmic trading addressed
NEW YORK, July 5, 2007 — The changing regulatory
environment, access to capital and efficient borrowing opportunities
are the top concerns of professional traders, according to
100 one-on-one interviews of independent professional traders
conducted by RBC Capital Markets, one of the top 10 trading
firms in the U.S.
Contrary to previous industry reports, the majority of independent
traders questioned said they are not employing algorithmic
trading and that access to dark liquidity pools and crossing
networks are not among their chief concerns in the year ahead.
"Although industry reports have cited the increased
popularity of algorithmic trading, more than two-thirds of
the traders we interviewed (69 per cent) said that they do
not use algorithmic programs, while 31 per cent said they
did," said Jeremy Frommer, managing director, RBC Capital
Markets. "The vast majority of self-directed traders
who are not taking advantage of these programs may want to
rethink including an algorithmic capability within their portfolio
of trading tools - it may give them the edge they need to
obtain the best electronic prices."
When asked to identify their biggest challenge in the year
ahead, one-quarter (25 per cent) of the 100 respondents identified
the changing regulatory environment and about roughly the
same number (23 per cent) said order execution technology
that does not keep up with changes in the market. Only 16
per cent said access to highly publicized dark liquidity pools
and crossing networks - electronic financial networks for
matching orders.
Of those surveyed at the RBC Capital Markets Professional
Traders Market Outlook Event, 62 per cent said they had been
trading professionally for six years or more and 26 per cent
said they had been trading between one to five years. Close
to half (48 per cent ) of those interviewed identified themselves
as technical traders, one-quarter (23 per cent) as fundamental
traders and 12 per cent as momentum traders. Roughly one out
of ten (nine per cent) identified themselves as event-driven
traders and eight per cent said they were news-driven traders.
The traders were also asked to forecast the most profitable
trading opportunities over the next 12 months. One out of
four traders polled (26 per cent) said exchange-traded funds
(ETFs), one out of five (20 per cent) said commodities, 16
per cent said options and only six per cent said index-based
derivatives such as e-minis - smaller units of futures contracts.
While 45 per cent of the survey respondents classified their
portfolio weighting bias as "neutral," 36 per cent
said "long" and a short portfolio weighting was
favored by close to one-fifth of those polled (19 per cent).
"Self-directed professional traders need and want the
same functionality and tools available to the largest institutional
investors," said Frommer. "That is why there is
such a huge demand for platforms that allow them to become
fast enough to compete, give them the access to capital to
contend and provide them with the analytical tools they need
to succeed."
When asked to identify a strategic area that traders want,
but are not getting from their clearing firm, 41 per cent
said "more efficient borrowing opportunities" while
28 per cent said clarity in interest cost calculations. Real-time
cost basis reporting was identified as a desired service for
16 per cent of those polled and simplified margin calculation
was identified by 15 per cent of those polled.
When RBC Capital Markets asked professional traders what
the top factor was when deciding on a trading firm, access
to capital was cited by 35 per cent, technology by 22 per
cent and the trading environment and level of service were
each cited by 15 per cent. Pricing was reported as a deciding
factor by only 13 per cent of the traders polled.
The RBC Capital Markets Professional Traders Market Outlook
is one of the few events of its kind where independent professional
traders gather in a single venue to share their knowledge
and insights regarding the major market challenges and opportunities
they face.
About RBC Capital Markets
RBC Capital Markets is the corporate and investment banking
arm of RBC and is active globally in debt origination, sales
and trading, foreign exchange, infrastructure finance, structured
products, metals and mining and energy. Its North American
equity underwriting, sales, trading and research business
leads the Canadian market and supports a significant and growing
franchise in the U.S. middle market. Bloomberg ranks
the firm as one of the Top 20 investment banks globally.
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Media contacts:
Kevin Foster, RBC Capital Markets, (212) 428-6902, kevin.foster@rbccm.com
Jackie Braden, RBC, (416) 974-2124, jackie.braden@rbc.com
Loretta Healy, Hubbell Group, (781) 878-8882, lhealy@hubbellgroup.com
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