IT Spending in the US Securities Industry: The Coming Contraction

April 26, 2005


Boston, MA, USA April 26, 2005

IT Spending in the US Securities Industry 2005: The Coming Contraction

While IT spending in 2004 and 2005 started to grow again, Celent's latest report predicts that in the years ahead, the securities industry will actually curtail its IT investments.

According to the latest report from Celent, an increasing number of securities firms are seeking to rationalize and streamline their IT architectures. Projects to re-architect systems environments and consolidate on fewer platforms are gaining steam. Since these projects tend to be longer term, it will be some time before securities firms are able to reap the rewards from these investments.

According to Octavio Marenzi, CEO of Celent and author of the study, "Contrary to the conventional wisdom, we do not believe that IT spending in the securities industry will continue to rise at a constant, monotonic rate into the foreseeable future. Rather, we anticipate a reduction in IT spending in 2008 and 2009. The major reason for this is not poor business prospects, but the increasing number of firms engaged in consolidation projects and seeking to rationalize their IT architectures."

This report examines the major business trends and technology issues and the implications of IT consolidation projects. It provides a breakdown of spending for US securities firms for 2005.Two firms, Merrill Lynch and Morgan Stanley, stand out as spending more than US$2 billion each.

A table of contents for the report is available online.

of Celent Communications' Institutional Securities & Investments and Retail Securities & Investments research services can download the report electronically by clicking on the icon to the left.  Non-members should contact for more information.


Send mail to with questions or comments about this Web site.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents


Boston, MA, USA April 26, 2005

IT Spending in the US Securities Industry

Return to report Abstract


Executive Summary 3
Introduction 4
The Mess 6
The Solution - Consolidation 6
Overall IT Spending Levels 7
Business Environment 9
Key Business Trends 14
Algorithmic Trading 14
Direct Market Access 15
Internalization 16
Market Structure 16
Electronic Trading 17
STP 17
Market Data 17
Hedge Funds 19
Offshoring 20
Wealth Management 21
Key Technology Issues 24
Server Consolidation 24
Linux 24
Grid Computing 25
Web Services 28
US Securities Industry IT Spending 30
Definition of IT Spending 30
Overall Industry Spending 31
Conclusions 36



Sign in to download reports and access personalized information