Solid  WSJ article courtesy of reporter Telis Demos (Jan 27 WSJ).. MarketsMuse has taken liberty and extracted most interesting observations..

“…. In recent years, a computer typically would have swiftly matched such an order with a buyer, sidestepping trading floors altogether…..But more recent soft trading volume has left many traders unable to move stock as quickly as they might like…”

A decade of promoting electronic stock dealing has reduced banks’ costs. Even so, financial firms are facing renewed profit pressure, as market volumes sink and new rules crimp financial firms’ capacity to deploy capital and take risks. ..”

One response has been to bring humans, long on the defensive in the stock-trading business amid cost-cutting and productivity-boosting efforts, back into the loop in a bid to move shares that otherwise might sit untouched.

As a result, banks are combining electronic and live trading businesses in a way they haven’t before….

Banks say clients still will have to opt into hybrid trading services that combine human eyes and electronic systems, and can continue to use separate functions if they prefer. Cheyenne Morgan, analyst at Tabb Group, a consulting firm, said banks are “working with clients to figure out what the right balance would be” between electronic and traditional trading…”

Commenting on the WSJ article, a senior trading specialist at WallachBeth Capital, a boutique execution firm specializing in ETFs, single stock block trading and options execution for institutions and hedge funds stated, “Its nice to know that the media has re-affirmed our firm’s business model, which has always been based on what we call the HT-Squared principle;  a combination of high-touch human intervention coupled with leveraging advanced trading system technology.”

That trader added, “The notion of relying exclusively on computers and algos has certainly proven popular during the past number of years. The obvious concern is whether relying on robots is appropriate for those obliged to secure real best execution, which means capturing market color not available on screens, and prices that will never be displayed on a screen, but are attained through discrete navigation.”