Tech Drives Buy Side

Terry Flanagan

Technology is a critical element for the institutional buy side, according to BlackRock.

In its second-quarter earnings release, the world’s largest investment manager indicated that technology will be a differentiating factor between which buy-side firms retain supremacy and which may get left behind.

“Going forward, technology-enabled scale will be critical for every aspect of an asset manager’s business: client service, alpha-generation and operational excellence,” BlackRock said in the release. “BlackRock’s technology and risk management revenue grew 12% year-over-year, driven by Aladdin®. In addition, our first three Aladdin Risk for Wealth Management clients are now live on the platform, benefitting from greater risk transparency and portfolio construction capabilities. We continued to expand our digital distribution offerings this quarter with the announced acquisition of Cachematrix and minority investment in Scalable Capital. Both transactions illustrate BlackRock’s use of technology to provide enhanced value and innovative solutions for clients.”

Large investment managers generally are not the quickest to adopt new technologies, but BlackRock is seen as among the most cutting-edge in the sector. Market participants and observers say its trading desk in particular is a standard-bearer in its quantitative methodologies, and the firm is thought to be more trading-savvy than some sell-side brokers.

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