Algorithmic Trading Market: Top Key Vendors, Segmentation, And SWOT Analysis By 2018 - 2026
Algorithmic Trading Market - Snapshot
Algorithmic trading is a process of using an automated computer programed to follow a defined set of trading instructions for placing a trade, accounting for factors such as time, price, and volume. Algorithmic trading or algo trading is a technology platform providing advantage of both artificial intelligence and human intelligence. Algorithmic trading helps in reducing transaction costs, allowing investment managers to take control of their own trading procedures. The main objective of such software is not just to maximize profits but also to control market risk and execution costs.
The market for algorithmic trading is forecasted to grow to US$ 21,807.6Mn by 2026, recording a CAGR of 10.2%.The algorithm trading market has experienced substantial growth due to large number of financial firms opting for increasing automation in trading processes. Integrated financial markets or an open market economy such as the European Union helps local vendors in buying foreign assets with reduced risks. Contribution of several international markets has aided developing countries in generating opportunities for portfolio diversification, global distribution of savings, and also risk sharing.
The algorithmic trading market is driven by the emergence of AI and algorithms in the financial service sector. This in turn is boosting the algorithmic trading sector globally. Furthermore, increasing adoption of non-equity trading algorithms by institutional asset managers is enhancing the use of artificial intelligence in the financial services sector. The global algorithmic trading market is anticipated to grow significantly during the forecast period, attributed to rapidly growing demand for market surveillance.
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By using market surveillance technology, traders are able to keep track of their trading activities and investment pattern.The rising need to build an economy with global as well as regional interdependencies force key vendors to formulate effective marketing strategies and develop new solutions for market surveillance. In addition, many companies are inclined toward the use of algorithmic trading in order to reduce market risks and transaction cost.
However, stringent regulatory guidelines are affecting the large-scale use of algorithmic trading. To conduct algorithmic trading and high frequency trading (HFT), all trading companies should inform the national regulatory authority and submit an application for approval from the regulatory authority.The regulatory environment for algorithmic trading and HFT practices are not favorable in some of the major countries such as China. There are barriers to the widespread application of automated trading, specifically for high frequency trading in financial markets across the country. This is consequently restricting the growth of the algorithmic trading market across the Asia Pacific region, as China is one of the major markets for the stock exchange.
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