The proportion of spot FX traded algorithmically by corporates shot up to 28% in 2016, from only 10% in 2015, according to a Greenwich Associates study.
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Richard Johnson, |
Across the wider FX market, corporate use of algos increased to 10% from 7%, states the report, written by Richard Johnson, vice-president of market structure and technology at Greenwich, which investigated long-term investor appetite for FX algos.
Growth was concentrated outside the most active FX trading corporates – those trading more than $50 billion per year in notional value – where algo use was already well established. For these corporates, algo use remained essentially flat, having declined to 23% in 2016, from 24% in 2015.
The most startling jump was for the least active corporates, trading less than $1 billion notional per year, where FX algo use rocketed up to 10% in 2016 from no use at all in 2015. For corporates trading between $10 billion and $50 billion notional it increased to 12% from 8%, while for the $1 billion to $10 billion segment it was up by 1% to 3%.
Observers in the FX algos business say the survey confirms trends they have observed themselves.