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Self-directed professional traders assess market at RBC Capital Markets forum


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.


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