Client Affairs

No Time To Write off Inter-Dealer Voice Brokers

Steve Pettitt 9 December 2021

No Time To Write off Inter-Dealer Voice Brokers

In an increasingly digitalised trading environment, this guest writer looks at the future for voice-brokered transactions. Are they heading for redundancy? And, if so, how shortsighted is the bet on electronic order markets providing all the answers?

Director at Britannia Financial Group Steve Pettitt considers the rampant march of automation being led by AI that has come to dominate daily trading activity. He argues that voice-led trading should not be trampled under foot by this rush for efficiency; it still has a critical place in meeting high and ultra-high net worth client needs. Offering his perspective on how trading systems have developed over the last few decades, and lurched into overdrive during the pandemic, Pettitt (pictured) finds plenty to defend in the human broker touch and striking a balance between human and machine reliance. London-based Britannia is a full-service brokerage that counts UHNWs as a key client segment. We welcome outside contributions, where the usual editorial disclaimers apply. Email feedback to and

As automated trading continues its apparent relentless progress, it might seem almost inevitable that the days of voice-led inter-dealer broking are coming to a close. According to a recent report by Allied Market Research, the global automated trading market is projected to grow by $12.14 billion this year and achieve a CAGR of 12.7 per cent from 2021 to 2028. This impressive growth is being driven by a number of factors.

Examining those closely makes a compelling case for automated trading but it also demonstrates why there is still a place for the voice inter-dealer broking model and how the two can be complementary. This is a topic that ultra-high net worth individuals should be aware of as it is highly relevant to the current and future management of their investment portfolios.

The first wave of automated trading was spurred by technological advances in platforms and algorithms and in an effort to achieve apparent cost efficiencies. This was later accelerated by regulatory reform – a process that is still continuing.

Pandemic effect
More recently though, automated trading has gained prominence as a result of COVID-19, which saw disruption to the over the counter (OTC) voice broking model, as traders struggled to adapt to working from home. This, together with a growing belief that algorithmic trading reduces human errors and is faster at making decisions during uncertain times, saw its popularity increase during the pandemic.

Other factors that have contributed to the growth of automated trading during the pandemic included an increase in popularity of high-frequency traders (HFT) and new, novel algorithmic trading products that have been launched to manage higher trading volumes.

Clearly there are compelling reasons for the acceleration of automated trading, but it would be unwise to write off the voice inter-dealer broking model. We have been here before, and the voice broking model has survived because it has continued to demonstrate value.

In the early 2000s there were widespread predictions that the emergence of electronic trading would see the demise of voice brokers, who rose to prominence in the 1990s. While that was a challenging period for voice brokers, marked by a contraction of the market and job losses, there was a turnaround resulting from significant disruption to financial markets worldwide.

When the global financial crisis hit in 2007/08, the resulting credit crunch saw a catastrophic demise of liquidity in the cash bond market. As a direct result of that, there was a resurgence in voice broking, demonstrating the adaptability and resilience of the model.

Automation boom
In recent years, we have seen much greater levels of automated market trading, driven largely by increasing adoption of AI systems which are being deployed across multiple trading floor functions.

In many ways, the adoption of AI-based automated trading reflects what is happening in many other sectors. AI-based technologies are reshaping many industries, changing the nature of long-established occupations, making some roles redundant while creating entirely new ones.

Kasparov's view
Since his famous defeat by IBM’s Big Blue supercomputer in 1997, former world chess champion Garry Kasparov has gone on to becoming a respected commentator on the emergence of AI and its potential impacts on the workplace and society at large. While acknowledging that we are seeing and will continue to experience widespread disruption to all sectors as a result of AI, he also sees great opportunity. In his view, we need not fear intelligent machines and there is a great opportunity to be realised by working with them. This logic certainly applies to automated trading.

The drive towards ever-greater levels of automation in financial markets still leaves a great deal of scope for voice-led inter-dealer broking. A key reason for this is the fact that OTC brokerage remains heavily human centric – with good reason. Humans are simply better at dealing with nuance and complexity encountered in everyday trading scenarios.

Human contact, client trust
In today’s market, voice brokers remain a critical go-between for more complex traded assets which are not suited to electronic order markets. The real sweet spot for today’s voice brokers is in markets where products are illiquid or complex. The same can also be said for emerging market transactions. Importantly, they also play a crucial role in larger transactions, where human contact and client trust in their broker are crucial.

Trust is the major factor for voice brokers remaining relevant – especially to UHNW individuals. When engaging wealth managers, this group has a unique set of requirements. They need highly tailored services that exceed the capabilities of portfolio management services that rely too heavily on automated trading.

What voice brokers offer that AI based services cannot, is a thorough understanding of a client’s specific needs and the intuition and intelligence to make the best decisions for them. The value of strong, trust-based relationships is paramount to this group and more than anything, this is the value add that voice brokers will continue to offer UNHW’s, in spite of increasing levels of automation.

The role of voice brokers is becoming more niche but at the same time it remains crucial. It is likely to play an important role well into the future – even as automation continues its forward march. The ideal solution is the Kasparov view of how we can get the most out of AI and humans, taking a man and machine, not  a man versus machine approach. This is, in fact, what we are seeing today. The market is very much on the road to automation, but it’s taking voice brokers with it.

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