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Title: Algorithmic Trading Market Analysis | CMI

  • Coherent Market Insights
  • Market Research and Business Consulting Services
  • https//
  • COVID-19 Impact Tracker

  • Algorithmic Trading Market Report, by Function
    (Programming, Debugging, Data Extraction,
    Back-Testing Optimization, and Risk
    Management), by Application (Equities, Forex,
    Commodities, Funds, Others (Insurance, etc.)),
    and by Region (North America, Europe, Asia
    Pacific, Latin America, Middle East, and Africa)
    - Size, Share, Outlook, and Opportunity Analysis,
    2019 - 2027
  • Global algorithmic trading market was valued at
    US 10,346.6 Mn in 2018 and is expected to
    exhibit a CAGR of 10.7 over the forecast period
    to reach US 25,257.0 Mn in 2027.

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Market Drivers
  • The global algorithmic trading market is expected
    to witness significant growth during the forecast
    period (2019-2027). This is attributed to
    increasing adoption of cloud-based solutions,
    services, and cloud computing for algorithmic
    trading. Traders use cloud services for
    backtesting, trading strategies, and run-time
    series analysis with executing trade. Traders
    choose cloud computing as it is capital intensive
    to build ones own data centers for services such
    as data storage, backup and recovery, data
    management and trading networks. Therefore, it is
    easier to rent space over cloud rather than
    developing software or hardware infrastructure.
    According to Coherent Market Insights, the cloud
    computing market is expected to grow from US 58
    billion in 2013 to US 191 billion by 2020, and
    the professional cloud services market is
    expected to grow from US 15.36 billion in 2017,
    to US 41.59 billion by 2023. Hence, increasing
    adoption of cloud-based services is expected to
    drive growth of the algorithmic trading market.
  • Growing demand for AI-based services in the
    financial sector is driving growth of the
    algorithmic trading market. In algorithmic
    trading, AI helps to adopt market conditions,
    learn from experiences and make trade decisions
    accordingly. Trading houses such as Blackrock,
    Renaissance Technologies, and Two Sigma among
    others use AI for selecting stocks. According to
    Coherent Market Insights, in 2018, about 37 of
    the financial institutions in India invested in
    artificial intelligence-focused technologies, and
    around 68 plan to adopt it in the near future.
    Therefore, increasing adoption of AI in the
    financial sector is expected to drive growth of
    the Algorithmic Trading Market over the forecast
    period. Moreover, increasing adoption of
    non-equity trading algorithms by institutional
    asset managers is another factor driving growth
    of the algorithmic trading market.

  • Moreover, increasing disposable income has led to
    an increased trading activity which makes it an
    important factor driving the growth of the
    algorithmic trading market. According to India
    Brand Equity Foundation (IBEF), in 2018, Indias
    total rural income was around US 572 billion and
    is projected to reach US 1.8 trillion by the
    year 2021. India's rural per capita disposable
    income is estimated to increase at a CAGR of 4.4
    to US 631 by 2020. Furthermore, according to
    DATA USA, in 2017, the U.S. population was 326
    million with a median age of 38.1 and a median
    household income of US 60,336. Between 2016 and
    2017, the U.S. population grew from 323 million
    to 326 million, which was an increase of 0.802,
    and its median household income grew from US
    57,617 to US 60,336 (a 4.72 increase).

Figure. Global Napping Pods Market Value (US Mn)
Analysis and Forecast, by Application, 2017 2027
Market Segment
  • On the basis of application, the global
    algorithmic trading market is segmented into
    Equities, Forex, Commodities, Funds and Others.
    The equities segment accounted for the largest
    share in 2018, as is one of the leading asset
    classes for trading shares of companies in a
    secured, controlled, and managed environment. An
    equity market, also known as stock market or
    share market, is a market where shares of
    companies or entities are issued and traded,
    either through exchanges or through dealers or
    brokers. The place where the stocks in an equity
    market are traded is the 'Stock Exchange'.
  • For instance, the equity shares in India are
    traded through two stock exchanges National
    Stock Exchange of India (NSE) and Bombay Stock
    Exchange (BSE). In equity, algorithmic trading is
    used to execute a large market order by using
    automated pre-programmed trading instructions
    accounting for variables such as price, time, and
    volume. In equities, algorithmic trading is
    simply a way to minimize cost, market impact, as
    well as risk in execution of an order.

  • On the basis of region, algorithmic trading
    market is segmented into North America, Europe,
    Asia Pacific, Latin America, Middle East, and
    Africa. North America algorithmic trading market
    contributed the largest market share in 2018
    owing to technological advancements and
    increasing application of algorithm trading among
    various end-users such as banks and financial
    institutions in the region.
  • According to SelectUSA, financial markets in the
    U.S. are the largest and most liquid in the
    world. In 2017, the finance and insurance sector
    in the U.S. accounted for 7.5 (or US 1.45
    trillion) of the countrys gross domestic
    product. In April 2018, BMO Capital Markets, the
    investment and corporate banking arm of BMO
    Financial Group, announced a multi-year strategic
    partnership with Clearpool Group, a provider of
    advanced electronic trading software. Under this
    agreement, Clearpool will provide BMO with a
    fully customizable algorithmic management system
    (AMS) infrastructure to execute Canada equities
    for BMO's institutional clients.

Market Opportunities
  • Furthermore, several algorithmic trading solution
    providers in North America are focused on
    integrating Artificial Intelligence (AI) and
    Machine Learning (ML) functionalities with their
    existing algorithmic trading platforms.
  • For instance, in May 2018, Bloomberg announced
    the launch of a new price forecasting application
    for investment professionals, which is powered by
    AI. The Alpaca Forecast AI Prediction Matrix is
    an application (app), which provides short-term
    market price forecasts for major markets such as
    EUR/USD, AUD/JPY, USD/JPY, CME Nikkei 225 Futures
    Index, and US 10-year treasury bonds, using the
    Bloombergs Market Data Feed (B-PIPE). Such
    factors are expected to aid in growth of the
    algorithmic trading market in North America over
    the forecast period.
  • Moreover, in April 2016, the U.S. Securities and
    Exchange Commission (SEC) approved a rule
    proposed by the Financial Industry Regulatory
    Authority (FINRA) to reduce market manipulation
    that requires algorithmic trading developers to
    register as security traders.

Key Players in the Global Algorithmic Trading
  • Some of the key players operating in the global
    algorithmic trading market include AlgoTrader
    GmbH, Trading Technologies International, Inc.,
    Tethys Technology, Inc., Tower Research Capital
    LLC, Lime Brokerage LLC, InfoReach, Inc.,
    FlexTrade Systems, Inc., Hudson River Trading
    LLC, Citadel LLC, and Virtu Financial.

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