FX algo trading set to surge this year

JP Morgan survey finds FX traders will shift from click-to-trade method to using algorithms to trade.

Foreign exchange algo trading is expected to increase this year despite traders stating they currently spend just 12% of their time trading with algorithms.

A poll of 200 institutional FX traders - carried out by JP Morgan - found 38% of traders are planning to increase algo usage this year.

Of those, 39% said they will use algos for options transactions and 30% said they increase algo usage for swaps trading.

FX traders stated 83% of their time is currently spent on the click-to-trade method although this is expected to decrease by 2% this year. 

The survey found liquidity seeking and limit based algos are most popular, closely followed by market trading and pegged algos.

Market volatility and the availability of liquidity were listed as common issues in the FX market, although 64% of respondents stated they feel there are no major issues facing traders.

A recent poll of buy-side head traders found the majority are unsatisfied with the standard algorithms provided by their brokers, as they look for a more personalised way to execute trades.

The Greenwich Associates report found just 7% of US buy-side institutions are happy with the standard broker algos used for trading.

Many senior traders expressed the need for algos to be customisable to suit their order and trading style, something standard algos do not provide.