retail aggregators, usage of single-bank platforms increased to nearly three quarters in 2011 from about half in 2010 and the jump in usage of multi- bank platforms was even more dramatic. Overall FX volume surged among retail aggregators last year, and the massive increases in total volume prompted these fi rms, which rely on electronic trading for nearly all of their business, to utilize all the tools at their disposal.
A Faster, more sophisticated future
T e FX market has the reputation of being perhaps the world’s most liquid and one of the world’s most effi cient marketplaces. It has also become one of the most competitive. As increasing amounts of business fl ow to multi-dealer platforms, banks fi nd themselves in a race to get prices quoted on these systems and to fi nd ways of diff erentiating themselves from competitors.
Many banks are looking to one tool they think will help them better compete: algorithmic trading. Only 8% of global FX market participants use algorithmic trading strategies for foreign exchange. While that share is up from the 6% using algo trades in 2010, the 2011 results leave little doubt that these strategies have
yet to gain much traction market-wide. However, the research results do show signs that algorithmic trading is beginning to catch on in certain segments of the market:
• Use of algorithmic trading strategies increased to 16% in 2011 from 12% in 2010 among the market’s biggest and most active traders — those generating more than $50 billion in annual FX trading volume.
• Use of these strategies increased to 12% from 8% among market participants in the United Kingdom and to 12% from 10% among U.S. participants.
• Twenty percent of hedge funds are using algorithmic trading strategies in FX, up from just 14% last year.
Meanwhile, many of the banks with which Greenwich Associates regularly works are investing heavily in the development of algorithmic strategies for foreign exchange, and they expect this product to attract signifi cant levels of demand in the months and years ahead.
As FX evolves into a mainly electronic marketplace, competition is taking place in milliseconds as opposed to minutes or hours. In such an environment, algorithmic trading strategies will play a much bigger role for both investors and banks.
Type of Electronic Trading System Used
Methodology Between September and November 2011, Greenwich Associates conducted interviews with 1,632 top-tier users of foreign exchange services at large corporations and fi nancial institutions in North America, Latin America, Europe, and Asia Pacifi c. Participants were asked about market trends and their relationships with their dealers.
april 2012 e-FOREX | 31
Source: 2012 Global Foreign Exchange Services Study
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152 |
Page 153 |
Page 154 |
Page 155 |
Page 156 |
Page 157 |
Page 158 |
Page 159 |
Page 160 |
Page 161 |
Page 162 |
Page 163 |
Page 164 |
Page 165 |
Page 166 |
Page 167 |
Page 168 |
Page 169 |
Page 170 |
Page 171 |
Page 172 |
Page 173 |
Page 174 |
Page 175 |
Page 176 |
Page 177 |
Page 178 |
Page 179 |
Page 180 |
Page 181 |
Page 182 |
Page 183 |
Page 184 |
Page 185 |
Page 186 |
Page 187 |
Page 188 |
Page 189 |
Page 190 |
Page 191 |
Page 192 |
Page 193 |
Page 194 |
Page 195 |
Page 196