The value of the global algorithmic trading market will reach $31,494 million by 2028, growing at a compound annual growth rate (CAGR) of 12.7% from 2022.
This is according to a new report, Global Algorithmic Trading Platform Market Research Report 2022, published by Valuates Reports, a market research firm.
The report noted that based on region, the Asia Pacific is expected to be the most lucrative in algorithmic trading (or algo trading) within the stated period.
Why Is Algo Trading Growing?
According to the report, reduced transaction costs and an increase in government regulations are major factors driving the growth of the algorithmic trading market.
Other factors are the rising demand for market monitoring and a surge in demand for quick, dependable and efficient order execution.
Valuates Reports explained: “It takes too much time for traders to perform their own arbitrage computations because they often only exist for a very short time, often just a few seconds.
“As a result, traders employ algorithmic trading that can quickly identify and analyze arbitrage opportunities.”
Additionally, the report noted that more large brokerage firms as well as institutional investors are depending on algo trading to cut down on the costs associated with trading.
This is because algo trading makes order execution simpler and faster, even drawing in exchanges, the advisory firm said.
On top of that, Valuate Reports explained that algo trading enables traders and investors to enjoy profits from slight movements in the price of assets.
“Because algorithmic trading allows users to quickly execute deals, it is driven by the surge in demand for effective trade,” it said.
How's Data Pushing Algo Trading?
According to Valuates Reports, the increasingly important role of data in investment decision-making is another reason algo trading is gaining traction.
The report observed that organizations in sectors such as banking, insurance and asset management are employing more of artificial intelligence and machine learning to capitalize on the data that digital investment channels make available.
“These AI-powered trading platforms evaluate enormous volumes of data far more quickly than people could. As a result, AI and algorithms in financial services present an opportunity for algorithmic trading market growth during the projection period,” the advisory firm explained.
Moreover, the increase in disposable income is fueling increased algorithmic trading activities, the report observed.
Sub-Market Analysis
According to Valuates Reports, the global algorithmic trading market can be categorized into the following categories: component, type of asset, deployment mode and type of traders.
Under component, there are solution and service providers, and under type of assets lies the stock markets, foreign exchange, exchange-traded funds, bonds, cryptocurrency and other types of asset classes.
On the other hand, cloud-based and on-premise are the options under the deployment mode, the advisory company wrote in a press statement highlighting the major findings of the report.
Also, there are institutional investors, long and short-term traders, as well as retail investors who make up the types-of-traders category.
Meanwhile, under the deployment mode category, Valuate Reports posits that the cloud-based solution sub-market is expected to be the most lucrative.
This is because more financial organizations are using cloud-based solutions to boost their productivity and efficiency, it said.
This solution type “guarantees efficient process automation, data preservation and cost-effective management,” the report said.
The algo trading report identifies major players in the algorithmic trading market, including 63Moons, Virtu Financial and Refinitiv Limited.
Also, there are Metaquotes Software Corporation, Symphony Fintech Solutions Pvt Limited, and Argo Se, among others.
