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JPMorgan eFX Survey: Electronic Trading at 76%, Algos on the Rise

Photo: Bloomberg

JPMorgan published the results from an online survey the company made in November 2016. About 200 institutional traders responded to some questions which the company posted. Questions about algo trading, overall market mood and issues for traders have dominated the questionnaire of the US bank surveying about 200 institutional traders.

According to the findings, about 64 percent of the respondents did not see any particular issues which traders are facing. The remaining 36 percent highlighted market volatility, liquidity availability, global political uncertainty and economic uncertainty as major challenges.

Emerging markets accounted for 26 percent of the total time institutional traders spent in trading the FX market. Unsurprisingly, G10 currencies received the most attention with 70 percent of the time dedicated to major currency pairs.

The most popular product for institutional FX traders is cash, followed by options, swaps and non-deliverable forwards (NDFs). For 2017 24 percent of traders are expecting to increase the use of cash transactions, 39 percent are focusing on options, 30 percent on swaps and 15 percent on NDFs.

Mobile Trading in Institutional?

JPMorgan’s study highlights an surprising answer for the institutional space – the rise of mobile. According to 31 percent of the surveyed, they would be likely to use a mobile app for trading in 2017.

Overall, 76 percent of trading has been executed via electronic trading platforms in 2017. The result reinforces the transition from voice dealing into eFX solutions.

The average number of electronic trading platforms in use is 4.4 with 71 percent of the volumes transacted by the respondents channeled via single dealer platforms. In addition, 36 percent of respondents state that they only use single dealer platforms.

Amongst the reasons for using a particular electronic trading platform are competitive pricing (78%), depth of liquidity (38%) and easiness of use (30%).

Algorithmic Trading

JPMorgan’s study also highlights that 38 percent of the institutional traders surveyed are planning to increase the use of altos in 2017. Last year 12 percent of the time spent on trading was dedicated to also usage, while 83 percent have been dedicated to “click to trade”.

The most popular types of FX trading algorithms are liquidity seeking (limit based), market trading (pegged), time or schedule based and participation based.

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