Goldman's Debt-Trade Future Has Fewer Humans

Some banks have announced sweeping cuts to their fixed-income units in recent years in the face of shrinking profits.

Not Goldman Sachs. The New York bank has avoided such significant layoffs, at least publicly, though it has trimmed more deeply than in years past. Its executives have expressed their commitment to the debt business even as revenues from fixed-income, currencies and commodities have declined even more than some of its peers.

But commitment to a business doesn't necessarily mean commitment to the number of people in it. Behind the scenes, Goldman appears to be preparing quickly for a future with far fewer human traders than it has had in the past.

One example can be found in the "Goldman Sachs Algorithm," or GSA, a computer program that allows investors to trade U.S. corporate bonds without having to communicate with a human trader, according to a Financial Times article on Tuesday.

The idea is that Goldman circulates lists of bond prices on different trading systems, including Bloomberg, that can be acted upon immediately rather than just serve as a starting point with a human trader. The bank relies on computer programs to adjust the prices in real time according to market conditions and other trades, according to the Financial Times article. (Bloomberg LP is the parent company of Bloomberg News.)