Electronic and algorithmic trading methods in the FICC markets are expected to continue to surge in the year to come, JP Morgan’s annual FICC e-trading survey has found.
Just under 80% of the traders surveyed expect to increase electronic trading in 2022, followed by 63% expecting an increase in algorithmic trading.
The use of APIs, multi-dealer and single-dealer platforms is also likely to rise, with 69% of FX traders already using or expecting their use of them to increase, followed by just over 50% of futures, commodities and rates traders.
Traders expect mobile trading applications to be the most influential in 2022, with a third of those surveyed predicting that they would shape the market most heavily in the year to come, followed by 25% supporting blockchain and 25% predicting that artificial intelligence and machine learning will have the most influence.
When asked their top market structure priorities for the year to come, over half of the traders surveyed said the integration and set up of execution management systems was their top priority, followed closely by workflow automation and access to streaming prices and the ability to aggregate.
“People want to understand and control the information leakage of their activity into the market and ultimately, have the best execution protocols that are available to them for the type of liquidity they’re looking for,” said Andreas Koukorinis, head of Credit eTrading at JP Morgan.
“I think direct connectivity gives you that, something we at JP Morgan are quite focused on. One of the topics that comes to mind as this is evolving is really the question around the perimeter of what is a trading venue and what is not.”
Nearly half of traders predict inflation to have the biggest impact on markets in 2022, while liquidity availability maintains its top spot for the sixth year running as the top daily trading challenge.
When selecting a liquidity source, 62% say price consistency is the most important criteria, up from under 50% of those surveyed in 2021.
“If you’re trading remotely and you’re accessing markets electronically, you need to be able to access liquidity, you need to know that your liquidity providers are there for you, and consistency of pricing is super important,” said Scott Wacker, head of eFICC sales at JP Morgan.
JP Morgan surveyed 718 institutional and professional trader respondents, up from 260 last year.