David Stryker said that although only 10% of foreign-exchange traders trade using an algorithm, a quarter of the largest institutions use them. “Over coming years, the market for FX algos will look more and more like equities.”
According to a report this week from Greenwich Associates, titled “The Evolution of FX Algos: From ‘Nice to Have’ to ‘Need to Have’”, algorithmic trade execution in foreign exchange is set to rise in the next few years.
Greenwich Associates estimates that the regulatory change has shrunk the market for European equity research by an annual $300 million, a figure the financial services advisory firm says could climb still higher before the year is out.
In a few years, currency traders will be hooked on algos like their stock-market colleagues.That’s the view of David Stryker,who sees foreign-exchange markets following equities in the widespread adoption of computerized trading.
“This kind of immutable storage of transaction records is a good idea, particularly when you look toward what’s happening in Europe with MiFID II and the climate surrounding record keeping and transparency,” said Richard Johnson.
A new report from Greenwich Associates sees algorithmic execution becoming “increasingly popular” among FX traders.
“Banks both large and small are preparing to capitalize on any favorable changes to the business environment,” says Frank Feenstra.
A Greenwich Associates survey indicates that EU money managers are likely to reduce the amount of external research they consume by 20%.
A recent study by Greenwich Associates found that 45% of Asian institutional investors surveyed found quant strategies to be “too opaque” and would like managers to better explain their strategies.
Research published by Greenwich Associates and based on interviews with buy-side traders around the world indicated that 58% of FX trading desks were using TCA systems.
