MarketsandMarkets forecasts the Algorithmic Trading Market size to grow from USD 11.1 billion in 2019 to USD 18.8 billion by 2024, at a Compound Annual Growth Rate (CAGR) of 11.1% during the forecast period. The algorithmic trading market is said to have growth potential, due to the increasing demand for fast, reliable, and effective order execution and reducing transaction costs.
The stock markets segment to hold a largest market size during the forecast period
The market is segmented on the basis of trading types. The trading types include Foreign Exchange (FOREX), stock markets, Exchange Traded Fund (ETF), bonds, cryptocurrencies, and others (assets, commodities, collateral mortgage, Credit Default Swap (CDS), and Interest Rate Swap (IRS)). The stock markets segment is expected to grow at a rapid pace in the coming years in the algorithmic trading market. It is one of the leading asset classes for trading various kinds of securities in a controlled, secured, and managed environment. Stock markets offer benefits, such as risk management and profit maximization, to brokerage and financial firms. The benefits are paving the way for traders to adopt algorithmic trading.
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Among services, the managed services segment to grow at a higher CAGR during the forecast period
The algorithmic trading market is segmented on the basis of services into 2 categories, namely, professional services and managed services. The managed services segment is expected to grow at a rapid pace during the forecast period, as managed services provide traders with support, maintenance, and infrastructure management for effectively developing trading strategies. The vendors in this market offer services to traders or end users so that they can effectively manage and deploy algorithmic trading solutions.
According to MarketsandMarkets, the algorithmic trading technology uses algorithms for trading complex shares and commodities incorporating complex formulas with mathematical models and human oversight to make decisions to buy/sell financial securities on exchanges and commodities. Trading rules are defined based on price, quantity, time, volume, and any other mathematical model. The technology can be used in a wide variety of financial functions, such as buy /sell, order execution, arbitrage, and trend trading strategies. To improve the accuracy of algorithmic trading, simulation and Artificial Intelligence (AI) are integrated with algorithmic trading for testing and analyzing historical data and decision-making process. Algorithmic trading assists traders and investors in executing orders at a rapid pace and expanding strategy portfolios.
Some of the major algorithmic trading vendors are Thomson Reuters (US), 63 moons (India), Virtu Financial (US), Software AG (Germany), MetaQuotes Software (Cyprus), Symphony Fintech (India), InfoReach (US), Argo SE (US), Kuberre Systems (US), Tata Consultancy Services (India), QuantCore Capital Management (China), iRageCapital (India), Automated Trading SoftTech (India), Tethys (US), Trading Technologies (US), uTrade (India), Vela (US), and AlgoTrader (Switzerland). These algorithmic trading vendors have adopted various organic and inorganic strategies to sustain their positions and increase their market shares in the global algorithmic trading market.
Thomson Reuters was founded in 2008 and is headquartered in Toronto, Canada. The company is one of the world’s leading providers of news and information for professional markets. It majorly operates in 3 business segments, namely, financial and risk, legal, and tax and accounting. Through its financial and risk business segment, Thomson Reuters offers critical news, information, and analytics that enables transactions and connects the communities of trading, investment, financial, and corporate professionals. The company’s solutions offer several advantages, such as improving performance through accelerating workflows, increasing margins through reduction in logistics costs, and efficiently managing risks and compliances. It enables its clients to make efficient and quick business decisions by providing them with professional expertise, technology, and intelligence. Moreover, it drives its growth through a renewed focus on organic product development, yielding a robust product pipeline in the algorithmic trading market.
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63 moons is another leading vendor in the global algorithmic trading market. It changed its name from Financial Technologies to 63 moons in May 2016. The company was founded in 1988 and is headquartered in Mumbai, India. It offers computer programming, consulting, and related services in India and internationally. It also offers exchange, clearing house, and depository solutions. These solutions cover various exchange operations, ranging from trading to settlement. The company invests a huge amount of its revenue in Research and Development (R&D) for developing new technologies and solutions specific to the financial sector. It offers an user-friendly financial platform to create digital market places in India as well as abroad. Moreover, it has partnered with innovative global stock exchanges, such as Multi Commodity Exchange of India Limited, Singapore Mercantile Exchange, Indian Energy Exchange Ltd., Dubai Gold and Commodities Exchange, and Bourse Africa Limited (erstwhile Global Board of Trade).
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