J.P. Morgan has already recorded $250 billion in NDF algo trades this year for the period running to mid-September. According to the bank, a fifth of all NDF algo volumes conducted by its clients is also now being internalised.
Andrew Cole, Currencies and Emerging Markets Execution Services at J.P. Morgan, explains that the trend is being seen as significant as it seems to indicate that the FX algo market has reached a stage in its evolution where traders are now more comfortable in transitioning from simple limit order trading on internal only liquidity to FX algo trading instead.
“We are now seeing from our internal traders a significant amount of volume going through our NDF algos and therefore our external clients should also feel comfortable and confident in using the product,” Cole says. NDF algos have been available to J.P. Morgan’s internal trading desks for the past few years and once proven to be working as expected, these algos were also made available to external clients at the start of the year.
“We went live with NDF algos in the most liquid Asia currencies first and there’s definitely interest in Brazil as well, as it is one of the larger of the NDF markets,” Cole adds. “Most of the interest is currently coming from trading desks in Asia and appear to be especially popular with hedge funds and real money clients.”