Our previous article in this publication on the intricacies of FX algo trading instigated some engaging discussion and feedback – thank you to all involved. Two themes seemed to resonate with readers: the strategic considerations of Execution Scheduling algos such as Time-Weighted Average Price (TWAP), and what differentiates algo providers. In response, this piece delves deeper into those topics.
Algorithms are more popular than ever in FX. That statement isn’t a surprise to market participants, especially on the buy side. The Bank of International Settlements December 2022 Quarterly review highlighted growing market participants highlighted …
Buy-side algo usage in FX has steadily risen over the past decade. Algos were once the domain of only the most sophisticated market participants with enough resources to devote to development and research.
As the three year review of the FX Global Code progresses, we will likely see that the industry as a whole believes that buyside participants will benefit from increased transparency of their algo executions, says Nickolas Congdon, Head of eTrading Services at Commerzbank.
Algo adoption in FX has lagged other markets and one of the keys to increasing its adoption is to listen to buyside demands, So what are the issues these traders encounter and how can service providers address them?
For the most part of this millennium, buy-side firms have been looking to take more control of their trading processes, from direct market access to the use of execution algorithms, firstly in equities but now ….
FX traders at buy side institutions have embraced algorithmic execution in increasing numbers over the past few years. In part, their decision to use this execution style has been driven by a concerted sales effort that promises tighter execution spreads
It is no secret that algo trading in FX is increasing. After steady but somewhat modest growth for a number of years, the last year in particular has seen a faster uptake in usage. This has been prompted by a number of factors, with MiFID II’s increased focus on best execution in particular prompting many to reach for algo strategies as a way to evidence execution quality. While algos can indeed provide a wide variety of benefits, it is important to be thoughtful about their implementation and usage.
There has been a marked uptick in the use of TCA (Transaction Cost Analysis) services within the FX market over the last few years. Doubtless significantly inspired by the FX Global Code and MiFID II, the use of TCA in FX has been suggested in some quarters to be a box-ticking exercise (although this charge is similarly levelled at TCA in other asset classes too).