Shrinking Trading floors - Why?

This is UBS’s Energy, Commodity and Financial Trading Floor In 2008 and 2016.

What happened?

  • Regulation

  • Fintech Impact

Infrastructure is weak, as trust shifted away from the banks towards asset managers after '08 and market structure to address liquidity concerns did not evolve in step. Quantitative easing and zero interest rate policies (ZIRP) inflated the size and breadth of markets like the corporate bond market, as market makers were discouraged from principal trading due to market regulation. At a time that encouraged record borrowing from corporations, dealers were forced to provide more secondary liquidity with scant balance sheets resulting in highly fragmented markets. Distribution models are no longer commercially viable, shrinking trading as losses pile up due to the lethargic approach to modernizing and adapting to new distribution technology.