Buy-side firms look to the future of NDF algos

June 2023 in Industry Reports

In Q2 of 2022, WBR Insights surveyed 100 Heads of FX Trading and similar from organisations across Europe. The topics and results featured from their report will be discussed at the TradeTech FX EU 2022 Conference. See page 26. Many firms are evaluating NDF streaming and algo solutions available in the market due to the potential efficiency gains and the survey results confirmed this as almost half of respondents are now doing this. But it is a nascent market and there are many infrastructure challenges that still need addressing by the platforms and banks, to encourage wider buy-side adoption.

Key benefits

Improved market transparency, reduced trading costs and risk management were the top benefits according to their survey. Just 34% of respondents said accessing new liquidity was a benefit of NDF electronification, as liquidity originates from clients wishing to sell, not from algos or other technology. In the past 12 months, more banks have been offering NDF algos. However, some challenges remain, from broken dates to aggregating NDF liquidity into one system lot. NDF trading is a complex process, but if these challenges can be overcome, it will provide FX traders with more opportunities for sourcing liquidity.


WBR asked their respondents what the main barriers currently preventing further adoption of NDF algo execution at their firms. Here are some examples of what they said:

  • We are seeking more transparency in NDF algos before adopting them.
  • Although we have trust in NDF algos, we lack the infrastructure necessary to use them efficiently.
  • The market seems too fragmented currently to formally consider adopting an NDF algo.
  • We need more expertise on delivering or integrating the right environment for an NDF algo.
  • Our data mechanisms aren’t ready yet for NDF algo execution.

Future growth on the way

Given that 49% of respondents are currently evaluating NDF algos and 27% are planning to adopt them in the next six months, the survey data suggests a healthy short- to medium-term future for these instruments.