Adapt and thrive: how FX algos are coping with volatility
FX trading algorithms are getting smarter at dealing with crises – and getting more popular as a result.
A few weeks is a long time in a volatile foreign exchange market.
At the end of March, Greenwich Associates published a report entitled 'Digitization delayed: why algos aren’t more popular in FX', based on data collected before markets felt the impact of Covid-19.
It found that only 37% of FX market participants surveyed used algorithms – and just 22% of their volume was traded algorithmically.
Fast forward to late April, and JPMorgan’s FX e-commerce team was telling clients of a big increase in volumes of algos for tickets with a notional value above $10 million, with 60% of these orders traded algorithmically in March.
Buy-side traders working largely from home while coping with a significant increase in the number of trades to execute have turned to algos so they can focus on more time-consuming, less liquid and complex trades.
Jill Sigelbaum, head of FXall, notes that algo trading volumes on that platform increased by 380% in March compared to the same period last year, with the bulk of the increase attributable to asset management clients.