Algorithmic Trading Market Forecast

The global algorithmic trading market is expected to be driven by a rise in demand for a reduction in transaction costs.

PORTLAND, PORTLAND, OR, UNITED STATES, December 8, 2023 /EINPresswire.com/ -- In a recent report by Allied Market Research titled "Algorithmic Trading Market," it was revealed that the global algorithmic trading market, valued at $12,143 million in 2020, is anticipated to reach $31,494 million by 2028, with a CAGR of 12.7% from 2021 to 2028.

The market's growth is primarily attributed to the increasing demand for efficient order execution, favorable government regulations, and the necessity for robust market surveillance. Additionally, the quest for reduced transaction costs is boosting the adoption of algorithmic trading. However, the market faces challenges related to insufficient risk valuation capabilities. On a positive note, the emergence of artificial intelligence (AI) and algorithms in financial services presents lucrative growth opportunities, along with the rising demand for cloud-based solutions.

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Rise in demand for quick, reliable, and efficient order execution, along with growing adoption of technologies to reduce transaction costs is expected to drive the growth of the global algorithmic trading market. Moreover, several governments across the globe are formulating supportive regulations which are further helping the market to surge ahead. However, the absence of proper risk valuation techniques might create hurdles in the growth of the market. Nonetheless, widespread adoption of AI and cloud-based solutions in financial services might create new growth opportunities in the coming period.

The Asia-Pacific region is anticipated to experience the most significant growth rate in the foreseeable future. This is attributed to substantial investments from both public and private sectors aimed at improving trading technologies, thereby increasing the need for algorithmic trading solutions to automate the trading process. Furthermore, the swift expansion of global players in the algorithmic trading market presents attractive opportunities for market growth. As an illustration, in March 2021, Quantitative Brokers, a U.S.-based trading algorithm provider, revealed plans to expand its services to Japan, following a similar initiative in Singapore the previous year.

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The solution segment experienced significant growth in 2020 and is expected to maintain its dominance. Algorithmic trading solutions offer benefits such as decreased transaction costs and accurate trade order placement without human intervention. Market players are actively introducing advanced solutions to cater to diverse customer needs. For example, BNP Paribas upgraded its FX trading platform in September 2019 with real-time analytics and interactive algorithms. Meanwhile, the services segment is poised for the highest growth, driven by widespread adoption of professional services to ensure the effective functioning of algorithmic trading solutions.

Based on component, the solution segment generated the maximum revenue in 2020, with around two-thirds of the total market share and is predicted to continue its dominance during the 2021-2028 period. On the other hand, the services segment is expected to have the highest CAGR of 13.8% during the same period.

Based on type, the stock markets segment held the highest market share, with around one-fourth of the total share in 2020 and is expected to continue on this growth trajectory during the 2021-2028 period. However, the cryptocurrencies segment is anticipated to be the fastest growing with a CAGR of 16.9% during the same period.

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Stock markets dominated the algorithmic trading market share in 2020, driven by increased adoption among investors seeking automated stock trading. However, the cryptocurrencies segment is projected to witness the highest growth, reflecting the growing interest of trading professionals in cryptocurrency trading.

Despite the COVID-19 pandemic, the algorithmic trading industry experienced minimal impact, with increased adoption during unprecedented circumstances. Institutions like the Reserve Bank of Australia noted the pandemic's role in furthering the industry's shift toward electronic trading. Market players responded by introducing innovative algorithmic trading products to navigate the challenges posed by increased retail trading volumes. For example, in March 2021, Cowen launched an algorithmic trading solution to assist institutional clients in managing market dynamics influenced by heightened retail trading volumes.

Some of the key algorithmic trading industry players profiled in the report include 63MOONS, Virtu Financial, Software AG, Refinitiv Ltd. MetaQuotes Software Corp. Symphony Fintech Solutions Pvt Ltd. Argo SE, Tata Consultancy Services, Algo Trader AG, and Tethys. This study includes algorithmic trading market trends, algorithmic trading market analysis, and future estimations to determine the imminent investment pockets.

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