Algorithmic execution has been on the rise in foreign exchange for a decade, but always with the understanding that in volatile times traders switch back to other channels to avoid the possibility of liquidity gaps and flash crashes.
In April, something changed and, for the first time, clients increased their use of algorithmic trading despite spiking volatility and highly unpredictable market conditions.
Deutsche Bank’s Vittorio Nuti, global head of LD and FX algo trading, assigned the change in behaviour to better algo performance, more trust and tools such as A/B testing that allow clients to have higher confidence in future outcomes. But above all, it is about costs. If clients can achieve a step change in execution quality via an algo, they will be happy to pay a fee for the tools.
It is in this context that Deutsche has earned the title of the world’s best bank for FX algos in 2025, after demonstrating marked improvements in outcomes for clients. Its algorithmic offering and client-centric approach fuel a feedback loop between its users and the product.
“We’ve seen very strong growth in our algo business in the past 12 months and we’ve increased our market share meaningfully,” Nuti says. “People are seeing the actual value of algos and, due to the work we’ve done in the past 18 months, we can demonstrate that via third-party TCA [transaction cost analysis] vendors.”
Deutsche continued to invest into its algo offering, which forms a key part of the bank’s new, modular strategy that puts as much emphasis on its riskless principal and agency offering as its principal business. Stark, its liquidity seeking algo, has gained strong traction with hedge funds and other users, due to its proven ability to excel against offerings from competitors.
We’ve seen very strong growth in our algo business in the past 12 months and we’ve increased our market share meaningfully
Vittorio Nuti
“DB’s offering outperforms the average on the street, meaning that even considering the fees clients pay to use these algos, their outcomes are significantly better than if they’d chosen other algo providers,” Nuti says.
Third-party TCA data from providers such as Tradefeedr has played an instrumental role in the shift in client behaviours, noting that the bank’s approach to working with clients on A/B testing has also contributed to the significant growth, especially in the quantitative hedge-fund space. Through the bank’s automated A/B function, which it launched in 2024, liquidity courses and settings are customised to test various outcomes.
“We’re seeing more and more hedge funds adopting algos,” adds Nuti. “They understand that they have strong views over market events and there is a cost to trade in such directional moves. Algos allow them to balance and execute efficiently whilst maintaining strong access to liquidity. Now, they are prepared to pay for their market impact and pay for some of that cost.”
In 2024, Deutsche launched its FX Advisory Board, which hosts client roundtables to garner feedback and ensure that tech budgets are directed at problems clients want solving. This feedback loop gives strong direction and focus to innovation and investment.
The bank’s algo suite covers a range of instruments that is rarely matched in the industry, with metals, non-deliverable forwards (NDFs), Latin American currencies, all the G10s and all the crosses, further boosting the appeal of the offering. One recent focus area for the bank has been Asian NDFs, where reducing costs has been a major focus.
In the six months since April, volatility subsided in markets, but algo usage has remained elevated, suggesting that the step change from previous levels is more than a fleeting moment.
“I think in the next 24 months we might see pre-trade integrations becoming a game changer, because clients will be able to see the numbers in front of them,” says Nuti. “Very exciting times ahead.”
