Given the amount of trading activity hedge funds generate, competition for their order flow is heating up. In order to maintain a competitive edge, sell-side firms must contiually develop their trading and execution technology and compete directly with other providers in price. Why It's Important: Order flow is the lifeblood of trading. Because a large hedge fund can average more than a million trades a day, a sell-side firm that wins a hedge fund's order flow essentially wins substantial profits. When it comes to trading and execution, technology-reliant hedge funds are also willing to spend more than the average buy-side firm for better service. According to estimates from prime brokers, hedge funds currently generate between 40 percent and 70 percent of all institutional equity commissions.
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