Speed is Still Top: FX Trading and Technology Study of 240+ Institutional FX Traders


StreamBase FX Study reveals increased buy side usage of FX Algos.

Algorithmic Trading

  • Use of execution algorithms is up 6% across all respondents
  • 48% of buy-side firms use algorithms to execute their FX trades, a 14% increase from 2011
  • Liquidity aggregation algorithms followed by floating algorithms are the two most commonly cited algorithms in use by FX firms
  • There is more variation and creativity in buy-side algorithms than on the sell side

Pricing

  • The usage of multi-bank platforms and single bank platforms increased 17% and 7% YOY, respectively
  • Participants are slightly more satisfied with single bank platforms than multi-bank platforms. 14% are not satisfied with the prices they receive from multi-bank platforms.
  • The industry still lacks benchmarks to compare prices
  • Nearly half of the sell side is looking to improve their pricing and rates engine capabilities

Risk

  • Both buy-side and sell-side participants are least satisfied with their “auto hedging and risk management capability”
  • About 54% of sell-side firms plan to improve or add real-time liquidity management capabilities to optimize liquidity for customers and to manage risk more efficiently

Exotics and Growth

  • No significant change in how the buy or sell side trade exotic pairs, yet the sell side listed the growth of emerging markets as having the second largest impact on their FX business

~ by mdavey on December 18, 2012.

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