[ A PA C
A L G O
S U R V E Y ]
Asian algos: Catching up
and taking over
This year could mark the shift when Asia goes from being viewed
as a developing market for electronic trading to being a leader.
A
s the importance of Asia to the global economy
has grown, its financial markets have inevi-
tably become more sophisticated and this is
a trend which our Asian Algorithmic Trading Survey
has tracked for the past six years.
During that time this market has moved on from
being a satellite of the big financial centres in North
America and Europe, with providers and products
which were all imports from the West. Now Asia clear-
ly has its own distinct algo environment, reflecting its
own market structure and the diversity of the region.
And with both the US and Europe suffering from a
decade of economic and political turmoil, it is perhaps
right for Asia to chart its own path and many expect
that it could become the most important economic
region in the world well before this century is over.
With that in mind, Fig 1 demonstrates the significant
developments taking place in this market. Average
scores are, for the most part, up and some areas in
particular have seen a major jump in scores.
The two areas with the biggest score growth were
speed and cost, which increased to 5.63 and 5.58
respectively. This may reflect the increasing commod-
ification of algorithms, where low cost and high speed
have come to be expected as a standard offering for
all brokers. High scores seen on anonymity, averaging
5.68, suggest a growing sophistication and understand-
ing of historic client needs, and anonymity has long
been one of the major reasons for using algorithms
over sales traders. However, as we’ll see on the next
chart, this may no longer be such a crucial concern
for the buy-side, as cost and regulatory pressures have
Fig 1: AVERAGE SURVEY SCORE FINAL
Year
Trader
Produc-
tivity
Reduced
Market
Impact
Execution
Consist-
ency
Cost
Speed
Anonym-
ity
Price
Improve-
ment
Customi-
sation
Ease
of
Use
Internal
Crossing
Execution
Consult-
ing
Client
Sup-
port
2012 5.31 5.18 5.21 5.29 5.23 5.34 5.04 4.96 5.29 4.78 4.91 n/a
2013 5.26 5.08 5.10 5.22 5.11 5.18 5.06 4.85 5.34 4.89 5.05 5.03
2014 5.61 5.51 5.53 5.56 5.64 5.58 5.36 5.29 5.69 5.41 5.60 5.72
2015 5.26 5.22 5.26 5.18 5.26 5.37 4.99 5.23 5.26 4.97 5.25 5.41
2016 5.60 5.40 5.48 5.15 5.19 5.62 5.41 5.17 5.50 5.05 5.70 5.57
2017 5.64 5.56 5.57 5.58 5.63 5.68 5.40 5.13 5.61 5.25 5.58 5.65
68
TheTrade
Winter 2017