Technological Innovations in Securities Trading: The Adoption of Algorithmic Trading

Technological innovations currently alter the traditional value chain in securities trading. Investment companies that used to buy trading services from their brokers are now enabled by technology to emulate core competencies of their brokers themselves. To investigate the adoption decision regarding one of those new technologies – Algorithmic Trading – a survey among the top European buy-side institutions has been conducted. The proposed research model successfully integrates components from the Task-Technology Fit model with core constructs of the UTAUT model. The results presented in this paper reveal that the fit among the perceived capabilities of the technology and the companies’ individual needs is a main driver for adoption. Further, the expected performance gains seem to excel the expected efforts perceived to be associated with the introduction of the technology, which further fuels the intention to make use of the new technology. Prior expertise about the technology characteristics shows to facilitate the adoption as it increases the expected performance and lowers the expected effort associated with the technology.