Algorithm Trading Market Research Report Information by Component [Solution (Platform, Software Tools) Services (Professional Services, Managed Services)], Deployment Mode (Cloud, On-premises), Trading Type (Foreign Exchange, Stock Markets, Exchange-Traded Funds, Bonds, Cryptocurrencies), Organization Size (Large Enterprise, Small and Medium Enterprise) and By Region (North America, Europe, Asia-Pacific, Middle East and Africa and South America) - Forecast till 2032.

Algorithm Trading Market Overview

According to the latest research report, it was estimated that the Algorithm Trading Market size was worth USD 10.3 billion in the year 2019, and it is projected to grow at a compound annual growth rate of CAGR of 11.9% during the forecast timeframe, reaching USD 44.4 billion by the end of the year 2032. A form of trading known as algorithmic trading is a form of dealing that involves the use of software programs to create and perform a wide range of data set transactions in the financial sector. A variety of major banks, dealers, and large investors contribute to the development of the set of data orders. A significant role in the share market is played by the data set, wherein each and every statistic is evaluated and used to benefit all parties involved. This further enables the investors to discover liquidity possibilities, which in turn helps them to make more informed trading choices. Because of these choices, it is possible to reduce transaction costs while also improving control over trading processes, reducing market volatility, and increasing profit potential.

Cloud computing has become much more important in the financial industry, as digitalization is becoming heavily reliant on it. The majority of financial institutions are now using cloud-based trading, which is accessible from a variety of platforms, including desktop computers and mobile devices.  software-as-a-service solutions, for example, enable end-users to keep data while also providing access to data via mobile devices. Flexibility and availability are two characteristics of cloud-based algorithmic trading that are anticipated to propel the development of an algorithm trading software market in the upcoming years. Aside from that, the incorporation of automation and artificial intelligence into algorithm trading platforms is expected to further fuel development in the algorithm trading market over the projected period.

This report contains all the information about Algorithms Market overview and highlights. The report also contains the culmination of dynamics, segmentation, key players, regional analysis, and other important factors. And a detailed analysis of the global Algorithm Trading Market forecast for 2024 is also included in the report.

Figure 1: Algorithm Trading Market Size, 2022-2030 (USD Billion)

Source: Secondary Research, Primary Research, and Analyst Review

Algorithm Trading Market Opportunity

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  Growing adoption of Cloud

  
  

Cloud computing has become much more important in the financial industry, as digitalization is becoming heavily reliant on it. The majority of financial institutions are now using cloud-based trading, which is accessible from a variety of platforms, including desktop computers and mobile devices. software-as-a-service solutions, for example, enable end- users to keep data while also providing access to data via mobile devices. Flexibility and availability are two characteristics of cloud-based algorithmic trading that are anticipated to propel the development of an algorithm trading software market in the upcoming years. Aside from that, the incorporation of automation and artificial intelligence into algorithm trading platforms is expected to further fuel development in the algorithm trading market over the projected period.

Algorithm Trading Market COVID-19 Impact Analysis

The COVID-19 outbreak has had little impact on the growth of the algorithmic trading market. The adoption of algorithmic trading solutions has increased in the face of unprecedented circumstances. The COVID-19 pandemic has significantly fueled the growth rate of the algorithmic trading market, owing to the increased shift toward algo trading for taking decisions at a very rapid pace by reducing human errors. For example, the Reserve Bank of Australia, in its recent publication stated that they may have only furthered the industry's shift toward electronic trading.

Market Dynamics

Market growth for algorithmic trading is primarily driven by demand for reliable, fast, and effective order execution; the emergence of favorable regulatory policies; and requirements for market monitoring. However, shortcomings in risk valuation may slow down the industry growth to some extent. On the other hand, the emergence of Artificial Intelligence and algorithms in financial services provides an opportunity for development during the forecast period.

Market Drivers

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  Increasing demand for efficient Algorithmic Trading

  
  

Algorithmic trading is rapidly being used by big brokerage houses as well as institutional investors to cut down on costs associated with trading. This rapid use is attributed to the fact that algorithmic trading makes it easier and faster to

execute orders, making it attractive for exchanges. In addition, it enables traders and investors to quickly book profits off small changes in price. Therefore, the rise in demand for effective trade drives the growth of the algorithmic trading market, as it enables users to quickly execute trades.

Restraint

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  Strict regulations and low acceptance across many countries

  
  

Regulatory authorities across the world have been tightening their grip on the use of algorithmic trading in the financial sector to make sure that their market is secure and beneficial for the clients. With the increase in the adoption of automated systems to conduct trading activities, there is a greater need for regulators to step in and check for potential loopholes that could be exploited via the system. If a market will be technologically advanced, there will be a greater need for advanced risk management solutions as well, which is a necessity for the market to grow.

Challenges

Lack of knowledge, a high level of technical skill, a lack of transparency, and the absence of a common benchmark are all anticipated to create challenges for the major key players in the worldwide algorithm trading market.

Cumulative Growth Analysis

This solution segment is anticipated to retain its dominance in algorithms trading in the future years as the segment with the greatest increase in market share for solution providers continues to expand. The need for algorithmic trading technologies is primarily driven by the advantages they provide, such as lower fees owing to the absence of human involvement and the ability to issue trade orders in real-time and with pinpoint accuracy. In furthermore, market participants are developing sophisticated algorithmic trading solutions to meet the requirements of a diverse range of clients.

Value Chain Analysis

According to the reports, It has been determined that the global algorithm trading market is divided into four categories: component, trading type, deployment method, organization size, and area. The worldwide algorithm trading market has been segmented into two categories based on its component: solutions and services. The solution sector was further subdivided into two categories:  platform and software tool. Among the services segments, business solutions and managed services have been identified as the most significant growth areas. According to the kind of trading, the market has been divided into the following categories: foreign exchange markets, stock markets, exchange-traded funds, bonds, and cryptocurrencies.

The worldwide algorithm trading market has been segmented into two categories based on the method of deployment: cloud and on-premise. The worldwide algorithm trading market has been divided into two categories based upon the size of the organization: big businesses and small and medium-sized enterprises.

By region, the global Algorithmic Trading market has been divided into North America, Europe, Asia-Pacific, and the Rest of the World. North America accounted for the largest market. Asia Pacific is projected to exhibit the highest CAGR during the review period.

Asia-Pacific Market

The Asia-Pacific region is expected to witness the most growth during the forecast period. The region is widely considered one of the most booming and upcoming regions in the world right now. There is a massive influx of foreign investment in many countries into sectors such as real estate and technology, but especially technology - and it is no surprise that algorithmic trading will see a boom and progress here due to this high standard of investments available.

North America Market

North America dominates the market on all fronts when it comes to trading and investing. The region has a lot of money to invest in new technologies and tools, which means a lot of people have money to use when they're gambling online or making asset purchases; and a government that backs them up with copious funds. In addition, there are many agencies based here, that have access to limited amounts of personal data making it easier for them to funnel funds into their own businesses and thus enabling them to grow at an even faster rate than usual.

Competitive Landscape

The market comprises tier-1, tier-2, and local players. The tier-1 and tier-2 players have presence across the globe with diverse product portfolios. Companies such as Thomson Reuters (US), 63 moons (India), Virtu Financial (US), and Software AG (Germany), dominate the global algorithmic trading market due to product differentiation, financial stability, and strategic developments, and diversified regional presence. The players are focused on investing in research and development. Furthermore, they adopt strategic growth initiatives, such as expansion, product launches, joint ventures, and partnerships, to strengthen their market position and capture a large customer base.

Key Companies in the Algorithm Trading Market include

• Thomson Reuters (US)


• 63 moons (India)


• Argo SE (US)


• MetaQuotes Software (Cyprus)


• Automated Trading SoftTech (India)


• Tethys (US)


• Trading Technologies (US)


• Tata Consulting Services (India)


• Vela (US)


• Virtu Financial (US)


• Symphony Fintech (India)


• iRageCapital (India)


• Software AG (Germany)


• QuantCore Capital Management (China)


• ALGOTRADES - Automated Algorithmic Trading System (US)


• Jump Trading LLC


• Refinitiv Ltd


• Others

Recent Developments

In April 2023, FXALCHEMIST has launched an algorithm trading platform to transform retail investors' financial market approach. With the power of advanced machine learning algorithms and real-time data, the platform provides related trading technology previously used by institutional traders only.

In October 2022, Scotiabank in partnership with BestEx Research launched an algorithm trading platform in Canada. This platform is specifically developed for the Canadian Equities market. This collaboration fuels the market growth and offer growth opportunities for the market player.

In March 2022, Virtu Financial has entered a non-exclusive cooperation agreement with Arqaam Capital to deploy Virtu's global equity execution algorithms to clients in Middle-Eastern and North Africa (MENA) markets. Arqaam will provide market access and local expertise in MENA equity markets to Virtu clients, while Arqaam clients can leverage Virtu's trading algorithms to access global markets, including MENA.

Increased adoption of algo trading in Asia: Algorithmic trading revenues in Asia Pacific rose 34% in 2021 driven by rising demand in markets like South Korea, Taiwan, Singapore and India. Retail participation in algos is also increasing.