Growing focus on improvisation of execution performance will be the major driving factor for growth in the algorithm trading market between 2016 and 2025
The algorithm trading market is US$ 8,790.7 Mn in 2016 and is estimated to reach US$ 18,160.8 Mn by 2025. The algorithm trading market has experienced significant growth rate owing to increasing automation process in trading by a large number of firms. Integrated financial markets help the local vendors into buying foreign assets with the reduced risks. Involvement of various international markets has directed to global distribution of savings and also aiding the countries in creating opportunities for portfolio diversification and risk sharing. Increasing automation in the financial market across the globe is expected to fuel the growth by 8.7% between 2016 and 2025.
The global algorithm trading market exhibits high growth in near future across the globe. Some of the major driving factors contributing the growth are increasing focus on improving execution performance, and desire to reduce market impact and increase anonymity over large volume trading. However, complexity and lacking technical knowledge could inhibit the market growth. Integration of AI with current algorithm trading strategies is one of the future trend of algorithm trading market during the forecast period.
Global algorithm trading market has been categorized by functions, the market is broken down into order management and risk management & compliances. In coming years demand for risk management is expected to grow exponentially owing to the rising need for end-to-end risk assessment process by the businesses, whereas order management would continue to grow at a steady pace. The application segment is fragmented into equities, commodities, FOREX, funds, future & options, fixed income and derivatives among others. In coming years, the FOREX is expected to showcase positive outlook for the investors whereas Funds, or Exchange Traded Funds (ETF) are expected to grow at relatively the highest rate.
Geographically the algorithm trading market is presently dominated by developed regions like North America and Europe, however the market is expected to be in favor of Asia Pacific, as the region is anticipated to witness tremendous development in electronic trading over the coming years. Japan, Australia, and China being some of the key countries contributing to the APAC market growth.
Some of the major players influencing algorithm trading market are AlgoTrader GmbH, Trading Technologies International, Inc., InfoReach, Inc., Tethys Technology, Inc., Lime Brokerage LLC, FlexTrade Systems, Inc., Tower Research Capital LLC, Virtu Financial, Hudson River Trading LLC and Citadel LLC, among others.