[ A L G O R I T H M I C T R A D I N G S U R V E Y ]
Figure 4: Number of providers used(% of responses)
40 %
8 %
13 %
31 %
8 %
Factors for algorithmic usage Respondents’ reasons for using algorithms are presented in Figure 2 as a percentage of responses from 2024 to 2026. The top five reasons this year include ease of use, consistency of execution performance, reduce market impact, increased trader productivity and lower commission rates, collectively accounting for 51 % of all responses. Ease of use retained its position as the leading factor, though its share has edged down marginally over the past three years, suggesting a gradual maturing of how hedge funds engage with algo technology. The most dramatic shift across all features was algo monitoring capabilities, which surged 2.40 percentage points to 7.07 %. This sharp rise suggests hedge funds are placing significantly greater emphasis on visibility and control over their algo behaviour, potentially reflecting broader concerns around best execution obligations and TCA scrutiny. At the other end of the spectrum, greater anonymity recorded the sharpest decline, falling 1.24 %, though it remains sixth overall.
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Using multiple brokers for algos remains the norm The positive correlation between a firm ' s AUM and the number of algo providers used continued in 2026, though the headline trend is one of consolidation( Figure 3). Large funds managing over $ 50 billion in assets recorded the sharpest decline, where the average number of providers fell from 4.81 in 2025 to 3.48 in 2026, a drop of 1.33 and the most pronounced reduction across any AUM band. This suggests the biggest players are concentrating their flow with fewer brokers, perhaps prioritising depth of relationship over breadth of coverage. Funds in the $ 10 – 50 billion bracket followed a similar direction, falling from 5.21 providers in 2025 to 4.52 in 2026, reversing the increase seen between 2024 and 2025. Smaller funds managing 1 billion or less in assets also contracted notably. Against this broader consolidation trend, the $ 1 – 10 billion AUM cohort stood out as the exception, with average provider usage rising from 4.63 in 2025 to 5.09 in 2026, the highest figure across all defined AUM bands, suggesting mid-sized funds are actively broadening their algo relationships and exploring a wider range of execution solutions.
More broadly speaking, usage of multiple providers remains the market norm, with the majority of the firms( 69 %) leveraging more than one provider to meet their trading needs( Figure 4). However, rather than broadening their provider panels, firms are concentrating flow with a smaller number of trusted, highperforming algo partners, a trend driven by the growing complexity of financial instruments, persistent market volatility and an increased focus on execution quality over provider diversification. Smaller funds with up to $ 0.25 billion in AUM continued to use the fewest providers on average at two, reflecting more limited resources and narrower execution needs.
The consolidation theme is reinforced by Figure 4. The proportion of hedge funds using a single algo provider has risen from 24 % in 2024 to 30.71 % in 2026, a near seven-point increase in two years. Meanwhile, funds using exactly four providers have more than halved over the same period, from 15.33 % in 2024 to 7.87 % in 2026. In contrast, desks using three providers has grown, rising from 10 % in 2024 to 13.39 % in 2026, suggesting some funds are settling on a small but diversified shortlist rather than committing to a single provider or maintaining a large panel. Funds using five or more providers remain the largest single cohort at 40.16 %, though this group has declined steadily from 48.81 % in 2023, indicating that even the most diversified users are beginning to rationalise. As buy-side trading desks face mounting pressure to demonstrate
64 // TheTRADE // Q2 2026