Despite recessionary stumbles in 2008 and 2009, the industry posted overall growth over the past 5 years
Los Angeles, CA (PRWEB) October 16, 2012
New product offerings helped steadily grow the e-Trading Software Developers industry through significant changes in the market structure and financial services sector over the past five years. IBISWorld estimates that industry revenue grew at a 1.4% average annual rate over the five years to 2012. Higher revenue and profit were underpinned by an increased rate of new-product innovation driven by new technology trends. Cloud computing technologies, open and standardized development frameworks and the proliferation of data lead to new software functionalities, lowered software development costs and improved software times to market. “These technologies, in turn, helped industry firms grow demand through new product offerings while lowering costs to improve profit margins,” says IBISWorld industry analyst Doug Kelly. At the same time, they also increased the level of external industry competition from software developed internally by large financial firms by making it easier for them to develop their own systems more cost-effectively.
The increasing globalization of financial markets and growth in electronic trading increased investor demands for access to trading multiple asset classes globally, lower trading costs and improved analytics and data management functionality. As a result, financial firms investment in new trading software to meet these demands. Additionally, new regulations on the financial sector in 2010 prompted higher spending on industry software by financial firms to improve the transparency, efficiency and profitability of their trading operations. Consequently, IBISWorld expects industry revenue to grow 4.9% in 2012 to about $5.2 billion as institutional investors continue to spend on upgraded trading software that they delayed due to the recession. IBISWorld anticipates changing investor demands will continue to drive new industry product offerings and revenue growth over the next five years. Revenue is forecast to improve at a strong rate through 2017. According to Kelly, investors will continue to demand and spend on new trading platforms that combine advanced data management, data-neutral analytics and quicker execution times across numerous asset classes into a single interface. Profitability is also expected to improve as the industry consolidates and reduces labor and development costs to offset higher external competition from customized, internally developed software from the industry's larger financial service firm clients.
The e-Trading Software Developers industry exhibits a low level of concentration, with the largest industry player accounting for about 11.4% of industry revenue in 2012. The industry is highly fragmented with many players entering and exiting the industry frequently due to moderate yet decreasing barriers to entry. In the five years to 2012, the number of industry enterprises has decreased at an annualized rate of 0.3% to 126. Larger firms are acquiring smaller firms with talented employees and innovative software to increase their own scale and protect their market share. Over the next five years, such consolidation activity will gain momentum as firms become larger and more capable of making costly acquisitions. For more information, visit IBISWorld’s e-Trading Software Developers in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes firms that primarily develop independent, third-party software that allows institutional and retail investors to access and execute and monitor positions in securities markets. It excludes trading platforms developed by exchanges and alternative trading systems. Trading platforms developed internally by institutional investors and financial intermediaries such as banks and securities broker-dealers are also not included in this industry.
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Products & Services
Globalization & Trade
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Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.