Algorithmic Trading Market Driven By Growing Demand for AI-based Services in the Financial Sector

Global algorithmic trading market was valued at US$ 10,346.6 Mn in 2018 and is expected to exhibit a CAGR of 10.7% over the forecast period to reach US$ 25,257.0 Mn in 2027. Algorithmic trading, algo trading, automated trading, or black box trading is a technological advancement in the stock market. It is a programmed process that runs on a computer that follows a specific set of instructions (an algorithm) for placing a trade in order to generate profits at a speed and frequency that is impossible for human traders.

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Algorithmic trading is gaining significant traction which is useful for financial markets, and adopted in countries such as the U.S., India, the U.K., and South Korea. Accuracy, exceptional speed, and liquidity are unique features of algorithmic trading, which is expected to result in significant growth of the algorithmic trading market in the near future.

The global algorithmic trading market is expected to witness significant growth during the forecast period (2019-2027). This is attributed to increasing adoption of cloud-based solutions, services, and cloud computing for algorithmic trading. Traders use cloud services for backtesting, trading strategies, and run-time series analysis with executing trade. Traders choose cloud computing as it is capital intensive to build one’s own data centers for services such as data storage, backup and recovery, data management and trading networks.

Therefore, it is easier to rent space over cloud rather than developing software or hardware infrastructure. According to Coherent Market Insights, the cloud computing market is expected to grow from US$ 58 billion in 2013 to US$ 191 billion by 2020, and the professional cloud services market is expected to grow from US$ 15.36 billion in 2017, to US$ 41.59 billion by 2023. Hence, increasing adoption of cloud-based services is expected to drive growth of the algorithmic trading market.

Growing demand for AI-based services in the financial sector is driving growth of the algorithmic trading market. In algorithmic trading, AI helps to adopt market conditions, learn from experiences and make trade decisions accordingly. Trading houses such as Blackrock, Renaissance Technologies, and Two Sigma among others use AI for selecting stocks. According to Coherent Market Insights, in 2018, about 37% of the financial institutions in India invested in artificial intelligence-focused technologies, and around 68% plan to adopt it in the near future.

On the basis of application, the global algorithmic trading market is segmented into Equities, Forex, Commodities, Funds and Others. The equities segment accounted for the largest share in 2018, as is one of the leading asset classes for trading shares of companies in a secured, controlled, and managed environment. An equity market, also known as stock market or share market, is a market where shares of companies or entities are issued and traded, either through exchanges or through dealers or brokers.

On the basis of region, algorithmic trading market is segmented into North America, Europe, Asia Pacific, Latin America, Middle East, and Africa. North America algorithmic trading market contributed the largest market share in 2018 owing to technological advancements and increasing application of algorithm trading among various end-users such as banks and financial institutions in the region. According to SelectUSA, financial markets in the U.S. are the largest and most liquid in the world. In 2017, the finance and insurance sector in the U.S. accounted for 7.5% (or US$ 1.45 trillion) of the country’s gross domestic product

Some of the key players operating in the global algorithmic trading market include AlgoTrader GmbH, Trading Technologies International, Inc., Tethys Technology, Inc., Tower Research Capital LLC, Lime Brokerage LLC, InfoReach, Inc., FlexTrade Systems, Inc., Hudson River Trading LLC, Citadel LLC, and Virtu Financial.

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Detailed Segmentation:

Global Algorithmic Trading Market, By Function:
-Programming
-Debugging
-Data Extraction
-Back-Testing & Optimization
-Risk Management

Global Algorithmic Trading Market, By Application:
-Equities
-Forex
-Commodities
-Funds
-Mutual
-Hedge
-Pension
-Others (Insurance, etc.)

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Coherent Market Insights is a prominent market research and consulting firm offering action-ready syndicated research reports, custom market analysis, consulting services, and competitive analysis through various recommendations related to emerging market trends, technologies, and potential absolute dollar opportunity.

This release was published on openPR.