Most stuff in the IBM report have been said before. While it is true that a high % of tradition "upstairs" traders will probably lose their jobs, this will not make the City an empty place filled with data centers, however. Automated trading require quants, developers, and traders, so while there will be decline in trading desks (look at what happened at Goldman with their equity trading, they fired around 60-70% of their cash equity trader a couple o fyears ago), there is a huge demand for traders who can play a role in automated trading.
It is just nature of evolution. In 60-70-early-80s, floor trading dominated, a new grad would get a job as a clerk for a floor trader, do grunt work like checking trade tickets, trade confirms, etc, get garbage time when the boss is tire / drunk, eventually become a trader him/her self. A good chunk of exchanges like CBOT, or NYMEX still operated this way even only a few years ago.
In late 80s - now, upstairs electronic (but human decision making) mostly dominated, a new grad would get a job as an assistant on a trading desk, do grunt work like checking trade blotters, get exposure to covering a minor instrument or two when the boss are too busy, eventually get allocated a small book for him/her. Most of the trading desks 60-70% operate this way. In this environment, floor traders are reduced to mere "order fillers", and to get a read on the floor, but their role is largely diminished.
In the automated trading dominated world, a new grad would get a job as an assistant to an automated trading operation, do grunt work like monitoring the system, system tuning and some minor algorithm optimization, maybe get a chance to implement a small algor, eventually get allocated a small book to trade with. In this world, the role of electronic traders are diminished, to become system monitors, and to bail the system out trouble when it runs into limitations, but also require a high degree of understand of the algorithms and system mechanics involved.
Instead, what I am seeing is that there is a growth of "traders plus", basically traders who can do everything in the trading process, from modelling, quantitative analysis, to system development, and also trading (which is essentially monitoring the system and react as necessary).
