17 August 2017
Find out more

Algo revival powers surge in electronic trading volumes

21 July 2009  |  7237 views  |  0 Man writing graphs on glass wall

A surge in algorithmic trading helped drive a significant increase in the share of US equity trading volumes executed via electronic platforms last year, according to the results of Greenwich Associates' 2009 US Equity Investors Study.

Overall, the proportion of US equity trading volume executed electronically increased to 36% in 2008-2009 from 32% in 2007-2008 - a shift attributable in large part to the pick-up in algorithmic trading, says Greenwich Associates consultant Jay Bennett.

"After a chaotic period in which algorithmic trading strategies performed poorly and lost institutional equity trading volume to other methods of execution, algo trading came back strongly in the 12 month period covered in our research," he says.

More than three-quarters of all US institutions and 95% of the largest and most active institutional traders use algorithmic trading strategies, which currently account for about 18% of overall US equity trading volume. Institutions that use algorithmic trades employ these strategies for 23% of domestic trading volumes, up sharply from 17% in 2007-2008.

These institutions expect algorithmic trading to account for 27% of their trading volume by 2012, with banks predicting that they will be executing 33% of their trading volume through these strategies by that time.

At least some of the renewed growth seems to be coming at the expense of direct-market-access smart order-routing trades (DMA). The proportion of institutions using DMA trades declined slightly to 58% in 2009, and the share of total trading volume executed through these trades declined to 13% in 2008-2009 from 16% the prior year.


"Most algorithms lacked a pattern of historic data that could accommodate the unprecedented levels of volatility experienced in late 2007 and 2008," says Greenwich Associates consultant John Colon. "But many algorithms have now been redesigned to take the new data patterns into account, and institutions are once again embracing them."

Institutions appear to be moving slower when it comes to dark pools and crossing networks. Although the proliferation of dark pools has been the subject of considerable attention over the past several years, dark pools and crossing networks captured a flat 13% of trading volume in 2007-2008 and 2008-2009, and the proportion of institutions using these systems remained steady at 73%.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Dark pool pricing set to tumble as Bats Europe enters fray

Dark pool pricing set to tumble as Bats Europe enters fray

29 June 2009  |  5846 views  |  0 comments
SunGard launches dark pool ATS

SunGard launches dark pool ATS

23 June 2009  |  5152 views  |  0 comments
SEC bids to shed light on dark pools

SEC bids to shed light on dark pools

19 June 2009  |  8973 views  |  0 comments
LSE introduces proximity service

LSE introduces proximity service

01 September 2008  |  9366 views  |  0 comments
Deutsche Börse slashes algo trading fees

Deutsche Börse slashes algo trading fees

26 August 2008  |  9196 views  |  0 comments
Investors in the dark about dark pools

Investors in the dark about dark pools

14 August 2008  |  7078 views  |  0 comments
Nyse in algo trading move

Nyse in algo trading move

29 July 2008  |  8984 views  |  0 comments
Nyse Euronext woos algorithmic traders with fee cuts

Nyse Euronext woos algorithmic traders with fee cuts

05 June 2008  |  6484 views  |  0 comments
Algorithmic trading to drive e-fx volumes - Tabb

Algorithmic trading to drive e-fx volumes - Tabb

07 November 2007  |  7987 views  |  0 comments

Related blogs

Create a blog about this story (membership required)
visit www.worldpaymentsreport.comdownload the paper nowvisit www.dorsum.eu

Who is commenting?

Top topics

Most viewed Most shared
DBS Bank launches online car selling marketplaceDBS Bank launches online car selling marke...
9950 views comments | 13 tweets | 11 linkedin
China preps central clearing house for mobile payments providersChina preps central clearing house for mob...
9921 views comments | 8 tweets | 15 linkedin
Monzo appoints Curve co-founder Foster-Carter COOMonzo appoints Curve co-founder Foster-Car...
8265 views comments | 1 tweets | 3 linkedin
hands typing furiouslyCompliance: Overcome the data deficit
7724 views 0 | 1 tweets | 8 linkedin
PayPal buys Swift Financial to boost working capital bizPayPal buys Swift Financial to boost worki...
7661 views comments | 13 tweets | 7 linkedin

Featured job

£100-120K Basic dependent on experience plus subst...
London

Find your next job