While AI isn’t generating any alpha for traders (yet), it’s still a threat to the job security of those working on the trading desk. A sales trader with 20+ years of experience, conducting an anonymous Ask-Me-Anything on our new forum The Bubble, has illuminated why.
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“Half the roles done by humans don’t need humans, not any more,” the sales-trader said. The day-to-day work of most sales traders usually involves “admin, report compiling, data pulls, collation of news [and] writing summaries,” which he said can now all be done by AI, sometimes even more effectively. This is particularly true for non-specialist roles, but that’s not a new phenomenon; “over the past decade, a big chunk of generalist equity sales roles have disappeared,” he said.
As a specialist equity sales-trader, he has a higher estimation of his own job prospects. He said that specialists won’t be as severely impacted as “clients will always make time for someone who knows their coverage deeply, can challenge their thinking, and can spot dislocations or opportunities early.” He advises specialising in nuanced areas like biotech or financials equities, each of which have tricky regulatory issues to navigate.
Despite not needing humans for most of these jobs, banks hire them anyway; the sales trader says that this is because banks are “genuinely scared of AI.” They’re averse to using public models due to data leakage and compliance concerns. Internal LLMs, meanwhile, are “limited, heavily constrained, and nowhere near what ChatGPT can do.” There’s also a political element; the sales trader said the “old guard” are resisting AI adoption as it would “expose inefficiencies, flatten hierarchies, and automate functions that have been protected for decades.” These are temporary setbacks, though; the sales trader said that AI “will kill the parts [of the trading floor] that shouldn’t still exist.”
The sales trader will be answering questions in his AMA until this thursday. If you want to ask a question, you can join The Bubble, our new anonymous forum. We’ve recently put The Bubble into an open beta, and have created a community of over 2,000 finance professionals, including employees from major investment banks and trading firms, as well as prospective professionals from top universities. We’re planning AMAs like this one as a regular feature, so make sure to check back regularly for them.
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