Automated trading firms continue to make their presence felt in the FX market according to a new report released by Aite Group entitled: Electronic FX Market Update, 2015: The Race Tightens Up.
The firm found that slightly more than 40% of trading volume in spot FX is currently represented by HFT whilst on the FX algorithm side, overall activities have picked up now reaching more than 20% of the spot FX market. While first-generation algos tended to be single-stream algos designed to interact within the specific bank pool, most banks today offer both the single-stream and multistream algos, or direct market access (DMA), enabling customers more choices in terms of how they can potentially optimize their overall trading strategies.
In fact, when examining current adoption trends, the report notes that single-stream-only algos now represent the minority at 15%. Hybrid algos, which provide the flexibility of single- and multistream algos depending on the needs of the clients, represent the largest market share at 55%. The demand for algos has also moved beyond asset managers and hedge funds and has even migrated over to the corporate treasurers who are looking for an execution tool that can provide more transparency and better performance than the traditional custodian-based executions. The report is available at: http://aitegroup.com/report/electronic-fx-market-update-2015-race-tightens