Human touch still needed in trading: BIDS CEO

NEW YORK (Reuters) - Despite analyst predictions that trading floors on traditional stock exchanges may evaporate as electronic trading gains popularity, a human touch is still useful in certain types of trades, the chief executive of a top electronic trading network said on Wednesday.

"I wouldn't discount the floor brokers. I think there's some value to that and I always have," said Tim Mahoney, chief executive of BIDS Trading LP, a joint venture between a consortium of Wall Street firms and the New York Stock Exchange (NYX.N: Quote, Profile, Research).

"There's always room for people who add value, and I think in thinly traded stocks, small, and mid-cap stocks, human intervention can add some value."

BIDS alternative trading system executes trades electronically for investors hoping to swap large blocks of stock, but even as more and more investors use systems like his, Mahoney said investors could sometimes find more value by turning to floor brokers.

"If you are going to replicate the same motion over and over again, it is way easier to have a machine do it," Mahoney said.

"But in outlier events there is always an advantage to a human who can take non-related experiences and apply them."

For example, Mahoney compared the needs of buyside traders to airline passengers, saying that most of the time a trader could use an electronic system, the way a plane pilot relies on the auto-pilot for most of the trip, but in times of turbulence, a trader or plane passenger wants a human touch.

Instead of seeing floor brokers disappear, Mahoney predicted that their typical job would change to focus only on helping customers with more complex situations that machines cannot handle as easily.

"You're going to see less people, but those people will add more value and have more interesting jobs," Mahoney said.  Continued...