JPMorgan eFX Survey: Electronic Trading at 76%, Algos on the Rise

Major investment bank JPMorgan conducted a survey of 200 institutional traders.

JPMorgan has published the results of an online survey that the company conducted in November 2016. About 200 institutional traders responded to the US bank’s questions about algo trading, overall market mood and issues for traders.

According to the findings, about 64 percent of the respondents did not see any particular issues faced by traders. The remaining 36 percent highlighted market volatility, liquidity availability, global political uncertainty and economic uncertainty as major challenges.

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Emerging markets accounted for 26 percent of the total time institutional traders spent trading the FX market. Unsurprisingly, G10 currencies received the most attention, with 70 percent of time dedicated to major currency pairs.

The most popular product for institutional FX traders was cash, followed by options, swaps and non-deliverable forwards (NDFs). For 2017, 24 percent of traders are expecting to increase their use of cash transactions, 39 percent are focusing on options, 30 percent on swaps and 15 percent on NDFs.

Mobile Trading in Institutional?

JPMorgan’s study highlights a surprising answer for the institutional space – the rise of mobile use. 31 percent of those surveyed would be likely to use a mobile app for trading in 2017.

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Overall, 76 percent of trading has been executed via electronic trading platforms in 2017. The result reinforces the transition from voice dealing to eFX solutions.

The average number of electronic trading platforms in use is 4.4 with 71 percent of the volumes transacted by the respondents channelled via single dealer platforms. In addition, 36 percent of respondents stated that they only use single dealer platforms.

Amongst the reasons for using a particular electronic trading platform are competitive pricing (78%), depth of liquidity (38%) and ease of use (30%).

Algorithmic Trading

JPMorgan’s study also highlights that 38 percent of the institutional traders surveyed are planning to increase the use of algos in 2017. Last year 12 percent of the time spent trading was dedicated to algo usage, while 83 percent was spent on ‘click to trade’.

The most popular types of FX trading algorithms are liquidity seeking (limit based), market trading (pegged), time or schedule based and participation based.

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