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The algorithmic trading market size is estimated to grow at a CAGR of 12.23% between 2022 and 2027. The market size is forecast to increase by USD 11,190.9 million. The growth of the market depends on several factors, including the high demand for market surveillance, the rise in the integration of financial markets, and the growing opportunities and demand in APAC.
This algorithmic trading market report extensively covers market segmentation by component (solutions and services), end-user (institutional investors, retail investors, long-term investors, and short-term investors), and geography (North America, Europe, APAC, South America, and the Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The high demand for market surveillance is driving growth in an algorithmic trading market. There is an increase in the demand for market surveillance in the global algorithmic trading market that should drive compliance requirements so that market participants can keep track of their investment patterns and trading activities over the forecast period. To optimize their data management strategies and address the shortcomings of systems, top algorithmic trading market players are attempting to do so. It is important that vendors should build a market with international as well as regional interdependencies.
However, this, in turn, will help market players have the best assets globally. Therefore, strategies are being formulated to build high-risk infrastructures and augment the equity market over the forecast period. In order to meet the needs of a growing client base, insurance agents are attempting to set up risk management platforms. Market surveillance is expected to monitor and detect manipulation, abuse, and fraudulent behaviour patterns in the market across orders and trades, which is expected to drive the growth of the market in focus during the forecast period.
Technological advancement is a primary trend in an algorithmic trading market. The introduction of numerous electronic trading technologies has helped vendors, as well as customers. The incorporation of liquidity aggregation and algorithmic trading across different geographies has provided easy access to a broader range of market participants. This has also enabled market participants to take share risks which result in reduced trading costs and shorter execution times. Technological developments have led to a reduction in the cost of searching, which is regarded as an important feature of OTC markets.
However, many financial institutions are now focusing on ensuring the transparency of collaterals available to market participants. To achieve this, banks focus on efficient decision-making. Banks are also trying to reduce the operational risks involved in a collateral transaction by monitoring credit risks. During the forecast period, they are expected to invest heavily in collateral management, focusing on collateral optimization, cheapest-to-deliver algorithms, and maximizing profits, which are expected to drive the growth of the market in focus.
The lack of awareness is a major challenge in an algorithmic trading market. A few market participants are unaware of the existing best practices and guidance in the global algorithmic trading market. They're making decisions that make short-term gains. In order to preserve the integrity of the market, these practices may become unsustainable and need to be avoided. Language in connection with the protection of confidential information and data shall also be used. This is expected to enforce an internal control system in different FX transactions and promote greater adherence to those practices during the forecast period.
A uniform global code of conduct and principles made by the Bank for International Settlements (BIS) Markets Committee promotes greater adherence to the guidance. Creating a single global code of conduct for the FX market is a significant move. However, the same does not seem sufficient. Best practices to complement these rules should also be included. The Global Code of Conduct may ensure the smooth functioning of the markets and provide sufficient confidence between players to treat each other well, which is expected to hinder the market growth during the forecast period if it is supported by integrity and function.
The market research report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Algorithmic Trading Market Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
63 Moons Technologies Ltd. - The company offers algorithmic trading solutions through a platform called ODIN.
The research report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market share growth by the solution segment will be significant during the forecast period. The solutions segment of the global algorithmic trading market mainly includes the software used by traders for algorithmic trading. Algorithmic trading or automatic trading requires software platforms for the execution of large trade orders. In order to effectively manage high volumes of orders in time, algorithms are employed by private trading firms, hedge funds, and investment banks. With software integration into trade systems, traders are able to earn profits much more quickly than they traditionally do.
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The solutions segment shows a gradual increase in the market share of USD 6,439.52 million in 2017 and continues to grow by 2021. In order to assist traders in the management of trading for funds and investments, vendors offer a comprehensive range of software solutions. Customization as per user requirement, fast, automatic processing of high-volume data, reliability, cost-effectiveness, and availability of a guidance for installation and customization are the major features associated with this software solution.
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North America is estimated to contribute 35% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
The growth of financial trading has increased significantly in North America. Continuous trade monitoring and surveillance in the trading market, presence of retail and institutional traders, increasing focus on technology development, growing focus on AI and machine learning tools, and presence of prominent vendors are the major factors driving the growth of the algorithmic trading market in North America.
The COVID-19 pandemic had a negative impact on the growth of the regional algorithmic trading market in 2020. Moreover, the launch of large-scale COVID-19 vaccination campaigns in 2021 resulted in a number of industries reopening, such as stockbroking and also e.g. offline trading platforms. Investors have become more sure of resuming their trading on the stock market, given that there has been an increase in inoculations and a decreasing number of COVID-19 cases. This increased confidence led to a surge in trading activity, resulting in higher revenues for brokerage firms. Such factors are expected to propel the growth of the regional algorithmic trading market during the forecast period.
The algorithmic trading market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
Technavio categorizes the Algorithmic Trading Market as a part of the global application software market within the global IT software market. The parent global application software market covers companies that are engaged in developing and producing application and system software. It also includes companies offering database management software. The global application software market covers companies that are engaged in developing and producing software designed for specialized applications for the business or consumer market. Our market research report has extensively covered external factors influencing the parent market growth during the forecast period.
Algorithmic Trading Market Scope |
|
Report Coverage |
Details |
Page number |
166 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 12.23% |
Market growth 2023-2027 |
USD 11,190.9 million |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
12.05 |
Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
Performing market contribution |
North America at 35% |
Key countries |
US, China, Japan, UK, and Germany |
Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
Key companies profiled |
63 moons Technologies Ltd., AlgoBlocks, AlgoBulls Technologies Pvt. Ltd., AlpacaDB Inc., Argo SE, Auros, CRYPTO TECHFIN SL, InfoReach Inc., iRageCapital Advisory Pvt. Ltd., MetaQuotes Ltd., QuantConnect Corp., QuantCore Capital Management LLC, Refinitiv, Software AG, Symphony Fintech Solutions Pvt. Ltd., Tata Consultancy Services Ltd., Thomson Reuters Corp., uTrade, Wyden AG, and VIRTU Financial Inc. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
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