Bloomberg is reporting that at a recent industry event, Simon Wilson-Taylor, President & CEO of Molten Markets Inc, a provider of high performance FX platforms states that algorithms used in foreign-exchange transactions are poised for growth as traders shy away from telephone deals amid heightened scrutiny. He is quoted as saying “We’re on the edge of a huge growth in algorithms.”
This is not a surprise really as we have been reporting recently on how interdealer broker giant ICAP has been pushing voice brokers to make a quicker transition over to their electronic trading platform.
Currency-trading algorithm usage by institutional investors may rise to 18 percent this year, a 64 percent increase from 2013, according to a Greenwich Associates LLC report in March. Hedge funds using algorithms executed about 53 percent of their volume by that means in the past year, while corporate volume was about 3 percent.
“As soon as you realize you have to trade your orders throughout the day to get your job done, you want to automate that,” Simon Wilson-Taylor said. “And that takes you to algos. We’re going to see massive growth.”
A lot of conclusions can be drawn from these trends, but the fact remains that algorithmic trading in forex is here to stay. The question for the individual trader and investor is how more brokers and specialized companies can offer up algorithmic strategies more openly for those looking to draw a steady market neutral return away from more traditional asset classes.