Boston, September 13, 2011 – A new report from Aite Group examines key market trends driving algorithmic foreign exchange (FX) adoption, and analyzes existing challenges to market growth. It also highlights a few leading FX banks that currently offer algorithmic trading services, including Citi, Credit Suisse, Deutsche Bank, J.P. Morgan, and RBS.
Algorithmic trading in FX failed to garner wide adoption until recently, but client interest has increased in recent years, driven in large part by traders’ desire to create greater transparency and execution performance measurement. Clients used to algorithms in equities and futures markets, too, have pushed for the development of algorithms in the FX market. Despite growing innovation in the algo FX space over the last couple of years, it remains to be seen whether the level of adoption can reach the level experienced by the equities market. Overall, Aite Group expects FX algorithms to account for more than 25% of FX trade volume by the end of 2014, up from 7% at the end of 2010.
“Algorithmic trading is no longer a novelty item in the FX market,” says Sang Lee, managing partner with Aite Group and author of this report. “Most large FX banks continue to build up their algorithmic capabilities, including new-strategy development and an aggressive educational push for clients. Aite Group expects the overall adoption of FX algos to increase over the next five years as buy-side traders continue to demand them.”
This 24-page Impact Note contains seven figures and one table. Clients of Aite Group's Institutional Securities & Investments service can download the report.