IBM and the Economist Intelligence Unit have released a study forecasting that product groups of traders, now averaging forty-strong, will be four-strong by the end of 2015. The culprit, it says, is "electronification" - OTC's new favourite word - in particular the move towards rapid electronic trading and trade processing.

In addition, the report predicts a split between alpha and beta - "In the future, investors... will be less willing to pay Alpha fees for Beta returns, and the way that funds are priced and managed will have to change." Pensions funds in particular will be driving the change be shifting from managed mutual funds to a combination of hedge funds - for alpha - and index-linked products or derivatives for beta, paying close to zero in transaction costs for the latter.

The profit will come from principal rather than agent trading, and from advice and value creation rather than simply intermediating in trades.

Overall, no huge surprises (everybody is expecting a market dominated by electronic broking, after all) but some interesting thoughts.

(Incidentally, readers will be unsurprised to learn that IBM recommends switching to using an external specialist to handle your strategic IT requirements.)

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