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Technology spending for 2011 will be focused on regulation and compliance, with systems integration, risk management, information security, and client reporting topping the list of technology priorities, says a new report from Aite Group.

Aite Group expects a nearly 6% increase to the average capital markets firm’s technology budget in 2011.

If 2010 carried a theme for capital markets technology, that theme was speed, says the report. High frequency trading pushed even traditional institutional trading firms into lower-latency efforts to stay competitive, new markets adopted electronic trading, and new asset classes found a need for speed. Then came the “flash crash” on May 6, 2010 and the Dodd-Frank Act; meanwhile, Europe began sifting through proposed changes to the Markets in Financial Instruments Directive. While many of these regulatory initiatives have yet to articulate demands on capital markets firms, they are high on the minds of capital markets senior technologists.

“As more CIOs look to outsource non-differentiating components of their infrastructure, Aite Group expects that certain groups of vendors will have rare opportunities to unseat internal development in 2011,” says Adam Honoré, research director with Aite Group and author of this report. “Vendors should be ready with fully-managed offerings and an easy integration story to fully capitalise on the shift.”

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