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High Trading Volumes Propel Algorithmic Trading Market in U.S.

Press Release   •   Aug 16, 2017 05:17 EDT

The concept of trading in stock markets worldwide has undergone a sea change – from physical trading to electronic ones to algorithmic trading from high powered terminals. Of them, algorithmic trading, also known as algo-trading, or black box trading is fast gaining traction. A recently added report by, titled, “Global Algorithmic Trading Market Size, Status and Forecast 2022,” offers a complete study of the market with respect to historical market performance, present trends, and future prospects.

Speed and accuracy are the two of the main unique perceived benefits of algorithmic trading. Using sophisticated computer programs, algo trading helps to take decisions to buy or sell shares in a split second, by factoring in time, price, quantity and even recent market moving news. It is also highly accurate as it eliminates various human errors. Because of this, algorithmic trading is becoming increasingly popular.
Apart from profit opportunities for the trader, algo-trading makes markets more liquid. Besides multinational investment banks, brokerages too are investing to create their algorithmic trading platforms. They are also trying to integrate with regional and local markets in developing countries so as to tap into new investment opportunities. One drawback of the market is the possible cyber-attack threats and technical glitches. Given the amount of trade being carried out instantaneously, any such issue can actually change the course of the market.

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The key regions in the global algorithmic trading market, studied in the report are the U.S., the European Union (EU), Japan, India, China, and Southeast Asia. Of them, the U.S. leads the market on account of high trading volumes and early adoption of technology. The region is also home to numerous brokerages and multinational banks, all of which has led to swift uptake of algo trading. Further, on account of continuous trade monitoring and surveillance, there is a rapid increase in FX trading activity in this region and this has filliped the market as well.
The European Union too has been seeing surging popularity of algorithmic trading on account of highly developed finance markets in most countries. Developed nations of Singapore, South Korea, Australia, Japan, etc. are also frontrunners in adopting algo trading. India, is an emerging market that is still struggling to progress on account of strict rules, lack of clarity about the process, and comparatively low trading volumes.
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The global market for algorithmic trading is choc-a-bloc with vendors and hence is fragmented in nature. With recent technological progress, which has brought about greater transparency in the market, the number of participants in the FX market is slated to go up. Going forward, large algorithmic trading companies will likely gobble up smaller ones to expand their outreach.
Some of the prominent participants in the global algorithmic market are Citadel, Optiver US, KCG, Two Sigma Investments, and Tower Research Capital.