The global algorithmic trading market to grow at a CAGR of 10.3% during the period 2016-2020.
Global Algorithmic Trading Market 2016-2020, has been prepared based on an in-depth market analysis with inputs from industry experts. The report covers the market landscape and its growth prospects over the coming years. The report also includes a discussion of the key vendors operating in this market.
One trend leading to the strong growth of this market is the advent of portfolio risk solutions. Many global vendors offer risk and scenario analytics for hedging, real-time pricing, and capital management of multi-asset portfolios. This unique tool provides a transparent and detailed solution to clients and investors to invest in specific markets or instruments. Finance professionals that deal with finance products use credit data and deal information to produce cash flows and analytics at the portfolio level.
According to the report, one driver leading to the impressive growth of the market will be the increased integration of financial markets. The increased integration of financial markets has helped surge liquidity in the equity market. Integrated financial markets help domestic investors buy foreign assets and foreign investors buy domestic assets at reduced risks. Regulatory changes also do not have an impact on the functioning of the capital market. The involvement of different international markets has led to the efficient global allocation of savings for future use. This aids different countries in creating an opportunity for portfolio diversification and risk sharing.
Further, the report states that wider bid-ask spread in Asia will act as a major challenge for this market. Asia faces different issues in implementing algorithmic trading due to its wider bid-ask spreads in different stocks. In markets such as Singapore, the average dealing spread for stocks is around 70 basis point (bp). So while the actual display liquidity in the market can be large, it can be extremely difficult to trade there because of the equally large spreads.