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