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[ A Figure L G O 4: R I Number T H M I of C providers T R A D I used N G (% S of U R V E Y ] responses) Hedge funds 2018 Hedge funds 2017 1-2 28 51.82 3-4 22 19.08 Figure 4: Number of providers used (% of responses) >5 50 29.1 Hedge funds 2018 Hedge funds 2017 28 1-2 51.82 22 2-3 19.08 50 5+ 29.1 0 10 impact (12.27%). There were marginal year-on-year increases for hedge funds using algos to achieve lower commission rates or higher speed/lower latency, but similarly to decreases in improving trader productivity or internal crossing, these levels have stayed relatively consistent since last year. While greater customisation was men- 20 30 more relationships with more algo providers, with firms manag- ing more than $0.25 billion all adopting multiple providers this year. The same was largely true of hedge funds, with only those in the smaller end of the assets under management (AuM) range scaling back the number of providers they used over the last year, particularly “Those firms with the means to implement more algos may, for now, merely be testing the waters and shopping around for the best functionality before settling on long-term strategic relationships with select providers in future.” tioned often by individual hedge fund respondents as reasons for seeking out new algo providers, overall there was little change in when firms cited this as a main reason to trade via algorithms. Long-only firms displayed a greater appetite for taking on 76 // TheTrade // Summer 2018 those managing between $0.25-0.5 billion of assets reducing the aver- age number of providers to 1.5. Mid-sized hedge funds however, displayed much more willing- ness to engage with a host of algo providers over the course of the year, with the average number 40 50 60 of relationships increasing from 1.56 to 4.5. Clearly mid-sized asset managers are taking advantage of the competition in this space to review their options in the new regulatory-heavy environment as a competitive differentiator. On the largest end of the scale, hedge funds with over $50 billion of AuM also increased the number of algo providers they used with an average of 5.2, up from 3.68 in last year’s survey. Figure 4 lends more credence to these trends, showing that half of all hedge fund respondents for this year’s survey now utilise, on average, five or more algo providers each, while one-quarter either use one-two or three-four providers. This represents a huge shift from last year’s survey which found that half of respondents were using be- tween one and two algo providers, with just over one-quarter using five or more. Those firms with the means to implement more algos may, for now,