The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Who gains from algorithmic trading?

Investment banks need to think carefully about which institutions they market their services to.

The head of algorithmic trading at a leading investment bank recently expressed the following view: “If algorithmic trading is so fundamentally good because it gets such great results, then in any other industry there would have already been a massive swing towards it. The reason why it does not happen in investment banking is because customers just aren’t savvy enough. It is only the smarter customers, the more demanding ones, who are prepared to pay for it. It’s the stupid ones for whom price is everything.”

Is this just a condescending and self-serving argument – or does it have some truth?

Investment banks clearly have something to gain from algorithmic trading or they would not be pushing it so hard. They have spent millions over the years developing execution algorithms to increase automation within their trading desks, and fight off the effects of relentless commission squeezes. Offering some of these directly to clients helps them to recoup some of their investment.

Most of the clients that are in a position to use directly the algorithms that brokers are offering already do some trading for themselves, through direct market access. Offering algorithms to these clients is an attempt by banks to win back some of the revenue they are missing out on from these clients.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree