Nicholas Pratt
Nicholas Pratt

Regional development of Algorithmic FX trading

As the use and adoption of algorithmic FX trading strategies continues to develop in the major financial markets of London, New York and Tokyo, focus is now turning to the next tier of FX marketplaces such as Western Europe, Latin America, Scandinavia, Australia and Asia. Nicholas Pratt sets out to discover what correlation exists between global growth patterns of Algorithmic FX trading and the characteristics of individual regional markets around the world

First Published: e-Forex Magazine 35 / Algorithmic FX Trading / April, 2009

The regional development of FX algorithms is potentially subject to a number of factors aside from the appetite and financial resources of market participants. Even accepting that the appetite and resources do exist and that a demand arises, how might the algorithms be designed to reflect the idiosyncrasies of specific international markets?  Will the regulatory regime of each region have a discernible influence over the design of algorithms, particularly in relation to best execution? What impact will the uncertainty in the capital markets have on the continued interest in emerging market currencies and will there be a similar demand for matching FX algorithms for these currencies? In the equities world, the development of algorithms has been partly driven by the need for speed and the desire for low latency, leading to a focus on the physical location of algorithms and execution venues. Is there likely to be such a focus for FX algorithms? Will the variable quality in infrastructure, connectivity...continued

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