As their revenues decline, hedge funds will spend $882 million on technology in 2009, 40% less than this year, according to TABB Group. But they will not be so quick to reduce spending on front-office trading technology.

“Any software or service that directly supports the investment process stands a far better chance against this inevitable tide of cost cutting,” said Cheyenne Morgan, a research analyst with TABB Group.

Seventy-five percent of the 61 hedge funds, with $227 billion in assets under management, that TABB interviewed for the report said they would like to expand their electronic trading capabilities to handle additional asset classes, including listed options, listed futures, fixed income and foreign exchange.

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