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Figure 4: Number of providers used(% of responses)
32 % 31 % 2025
12 % 12 % 13 %
Provider count 1 2 3 4 5 + analytics, to further cement their relationships with the buy-side for at least a decade now and they are well positioned to deepen their competitive market positioning.
When we remove the AUM filter, the number of providers used by long-only managers illustrates a clear bifurcation between those that use five or more providers( 33 %) versus firms just leveraging a single provider( 31 %) as shown in Figure 4. No doubt that the latter is dominated by smaller AUM firms engaged in limited trading activities whereas the larger firms will tend to lean towards multiple providers. Looking at this from a more high-level perspective, usage of multiple providers is still the market norm with close to 70 % of firms leveraging more than one provider to meet their trading needs. of AUM bands with only two exceptions seeing a slight uptick( i. e. < US $ 0.25 billion and US $ 0.5- US $ 1 billion). Despite the relative declines, large global firms with more than US $ 50 billion in AUM continue to use the highest number of algo providers at near five( 4.70), a minute shrinkage of 0.07 providers from last year. The biggest decline came from those firms with $ 10 billion to $ 50 billion in AUM who reported using approximately one less algo provider for this year(-0.98) though they still average four algo providers per firm.
The largest year-over-year increase in the number of algo providers used came from firms in the $ 0.5 billion to $ 1 billion AUM band, which reported an increase of 0.15 algo providers, bringing their average to 3.06. This was followed by an increase of 0.06 providers by firms with up to $ 0.25 billion in AUM, which are sitting at near three providers( 2.88).
While we have certainly seen fluctuations in the average number of providers over the last few years, the differences have not been significant and based on the growing complexity and volatility of global markets and continued enhancements around trading strategies, it is safe to assume that the average number of providers will stay largely unchanged for the foreseeable future.
As larger buy-side firms continue to move into nonequity asset classes, including fixed income and FX, we can expect to see the total number of providers increase, especially given prevailing unpredictable market conditions and regulatory uncertainty. Global banks have been investing in developing and marketing FX and fixed income algorithms, along with offering various trade and risk
Use of algorithms by value traded When examining the distribution of algo usage by value traded, similar to previous surveys, this year’ s result were once again evenly distributed, slightly more than half of the respondents indicating they use algos to trade more than half of their value at 52 %( Figure 5). This is an increase from last year, when 47 % of respondents said they traded the majority of their value via algorithms.
The largest increase occurred with those respondents trading 60 % to 70 % of value with an impressive year-on-year growth of 2.72 %, sitting now at over 8 %, though it still pales in comparison to more than 15 % of the algo usage in 2023. On the other hand, those respondents trading 40 % to 50 % of value showed the steepest decline at-1.86 %. While these are interesting year-over-year comparative numbers, what is
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