Asset managers will trade 89 percent of their options volume this year by calling brokers, down from 91 percent in 2009, while hedge funds are likely to do the same for 32 percent, compared with 54 percent two years ago, Tabb said. The main reason asset managers cited for calling their brokers instead of handling the orders themselves is convenience. Hedge funds say capital is the key reason they'd call their brokers, Tabb said.
Hedge funds are increasing their use of algorithms, or trading strategies that break up larger orders into smaller pieces, to 30 percent this year from 9 percent in 2009, the study reported. The funds tend to use algorithms for short-term strategies in options that are more liquid, Tabb Group said.