Proprietary trading firms are increasing investment budgets in anticipation of another strong year of trading in 2023, the latest Acuiti Proprietary Trading Management Insight Report has found.
The report, which is based upon a quarterly survey of the Acuiti Proprietary Trading Expert Network, a group of over 100 senior proprietary trading executives from across the globe and produced in partnership with Avelacom, found that 68% of firms represented in the network were planning above average technology investment budgets in 2023, whereas 25% said that their budget would be significantly above average.
Will Mitting, founder of Acuiti, said: “Proprietary trading firms are performing a vital role providing liquidity in highly volatile markets. The expectation of a strong business performance next year suggests that the volatility across global markets experienced during 2022 is likely to continue into next year. Firms are investing to remain competitive.”
“However, they will not be immune to the rising costs of doing business, in particular with regards to salaries where a shortage of skilled staff in many jurisdictions is leading to significant wage inflation.”
The main target for increased tech spending will be improving latency on existing markets, which points to the increasing importance of speed in times of volatile market conditions and droughts of liquidity. Connectivity to new markets will also be a focus area for investment.
Outside of technology, the main area that prop firms are planning to invest in is headcount. Almost 80% of the network is planning to increase trading headcount next year. This headcount expansion is likely to exacerbate the shortage of staff and wage inflation across most regions that was reported in the Q2 Proprietary Trading Insight Report.
The increased investment comes as firms predict another bumper year for proprietary trading as volatility continues to impact global markets. Overall, 73% of the network predicted an above average year for trading in 2023 with 18% anticipating that their business will perform significantly above average.
Aleksey Larichev, Co-Founder and Managing Director of Avelacom, said: “The results of this quarter’s survey show that in volatile times traders see optimized latency as a necessity. The ability to trade as quickly as possible in fast moving markets has never been more important.”
Download full report here: