The TRADE 2018 APAC Algorithmic Trading Survey | Page 5

[ A PA C
before experiencing a drop last
year to 42.57%.
This decrease can be treated as
something of an anomaly com-
pared to this year’s results, which
saw a significant spike in firms
using algos for their trading activ-
ities, with 65.89% of respondents
using algos for over 40% of their
trading, an increase of almost 25%
year-on-year.
Meanwhile there was a signifi-
cant decrease in firms using algos
to execute between 20-40% of
trades, with just 2.86% of respon-
dents doing so – a drop-off of over
25% from last year’s level. While
a number of buy-side firms are
A L G O R I T H M I C
still using algos to execute up to
5% of their flows (13.02%), the
picture here is that algo trading has
become so prevalent in the APAC
region that more firms are now
relying on it for either the bulk of
their executions or for extremely
niche orders that may be otherwise
difficult to execute.
In terms of which algos APAC-
based buy-side firms are choosing
to utilise, VWAP continues to
dominate the landscape, with over
three-quarters of respondents
using this algo, up from just under
70% last year. Other than imple-
mentation shortfall (basket)-type
algos – which saw year-on-year
T R A D I N G
S U R V E Y ]
use increase by 15.4% – there were
across-the-board decreases for
every other type of algo, with dark
liquidity seeking and TWAP algos
showing the greatest declines over
the past year.
Overall, the results of this year’s
survey show that APAC algo
trading is growing in terms of both
quality of algorithms and populari-
ty among buy-side firms, with little
to suggest that this trend will be
curtailed any time soon. While the
rest of the world struggles to adapt
to new regulatory regimes, APAC
may be well-positioned to take the
lead on algorithmic trading in the
years to come.
Figure 5: Algorithm usage by value traded (% of responses)
Not answered
2018 2017 2016 2015 2014
7.81 7.55 3.43 3.62 3.32
0 - 5% 13.02 12.14 6.23 7.24 7.85
5 - 10 % 7.03 5.66 11.22 8.69 10.09
10 - 20% 3.39 7.55 7.79 4.34 14.57
20 - 30% 0.78 15.09 12.46 7.97 10.99
30 - 40% 2.08 9.43 9.66 21.01 10.13
40%+ 65.89 42.57 49.22 47.10 43.05
Figure 6: Types of algorithms used (% of responses)
2018
2017
2016
2015
2014
% Volume (participation) 61.98 67.86 58.26 57.24 56.71
Dark liquidity seeking 33.07 45.38 56.39 26.81 60.30
Implementation shortfall (basket) 17.19 27.62 16.51 7.24 16.39
Implementation shortfall (single stock) 53.13 37.73 45.79 38.40 45.73
Other 7.29 9.42 8.41 13.04 7.19
TWAP 34.38 49.05 18.06 24.63 12.84
VWAP 75.26 69.80 60.74 57.25 57.20
Issue 58 // TheTradeNews.com // 93