Algorithmic Trading Global Market Opportunities and Strategies to 2032

This report describes and explains the algorithmic trading market and covers 2017-2022, termed the historic period, and 2022-2027, 2032F termed the forecast period. The report evaluates the market across each region and for the major economies within each region.

The global algorithmic trading market reached a value of nearly $16,121.1 million in 2022, having grown at a compound annual growth rate (CAGR) of 13.8% since 2017. The market is expected to grow from $16,121.1 million in 2022 to $28,908.9 million in 2027 at a rate of 12.4%. The market is then expected to grow at a CAGR of 15.7% from 2027 and reach $60,027.1 million in 2032.

Growth in the historic period resulted from the strong emerging markets growth, the rising demand for fast, reliable and effective order execution, the increasing government regulations, the growth in digitalization and increased demand for computing devices such as PCs and laptops. Factors that negatively affected growth in the historic period were security concerns associated with online trading and the lack of consistency in algorithmic trading.

Going forward, government support, the global population growth and urbanization, the increasing internet penetration and the increasing adoption of algorithmic trading in financial institutions will drive the growth. Factors that could hinder the growth of the algorithmic trading market in the future include stringent government regulations and the insufficient risk valuation capabilities in algorithmic trading systems.

The algorithmic trading market is segmented by type into foreign exchange (FOREX), stock markets, exchange-traded fund (ETF), bonds and other types. The stock markets market was the largest segment of the algorithmic trading market segmented by type, accounting for 37.2% of the total in 2022. Going forward, the stock markets segment is expected to be the fastest growing segment in the algorithmic trading market segmented by type, at a CAGR of 12.0% during 2022-2027.

The algorithmic trading market is segmented by component into solution and services. The solution market was the largest segment of the algorithmic trading market segmented by component, accounting for 68.5% of the total in 2022. Going forward, the solution segment is expected to be the fastest growing segment in the algorithmic trading market segmented by component, at a CAGR of 12.6% during 2022-2027.

The algorithmic trading market is segmented by function into programming, debugging, data extraction, back-testing and optimization and risk management. The programming market was the largest segment of the algorithmic trading market segmented by function, accounting for 38.0% of the total in 2022. Going forward, the programming segment is expected to be the fastest growing segment in the algorithmic trading market segmented by function, at a CAGR of 12.9% during 2022-2027.

The algorithmic trading market is segmented by type of traders into institutional investors, retail investor, long-term trading and short-term traders. The institutional investors market was the largest segment of the algorithmic trading market segmented by type of traders, accounting for 46.9% of the total in 2022. Going forward, the retail investors segment is expected to be the fastest growing segment in the algorithmic trading market segmented by type of traders, at a CAGR of 13.4% during 2022-2027.

North America was the largest region in the algorithmic trading market, accounting for 40.9% of the total in 2022. It was followed by Asia-Pacific, Western Europe and then the other regions. Going forward, the fastest-growing regions in the algorithmic trading market will be Asia-Pacific and South America where growth will be at CAGRs of 15.3% and 12.5% respectively. These will be followed by North America and Western Europe where the markets are expected to grow at CAGRs of 11.6% and 10.6% respectively.

The global algorithmic trading market is highly fragmented, with a large number of small players operating in the market. The top ten competitors in the market made up to 3.57% of the total market in 2021. The companies in the market are consistently adopting expansion strategies and undertook collaborations, partnerships and mergers and acquisitions, to gain traction in this high growth market across different regions. Virtu Financial Inc was the largest competitor with 1.70% of the market, followed by IG Group Holdings Plc with 0.73%, FXCM Group with 0.50%, London Stock Exchange Group Plc with 0.42%, TradeStation with 0.09%, Software AG with 0.07%, Wyden (Algo Trader AG) with 0.04%, Symphony Fintech Solutions Pvt Ltd with 0.01%, MetaQuotes Software Corp with 0.01% and 63 Moons Technologies Limited with 0.01%.

The top opportunities in the algorithmic trading market segmented by type will arise in the stock markets segment, which will gain $4,567.1 million of global annual sales by 2027. The top opportunities in the algorithmic trading market segmented by component will arise in the solution segment, which will gain $8,941.7 million of global annual sales by 2027. The top opportunities in the algorithmic trading market segmented by function will arise in the programming segment, which will gain $5,109.1 million of global annual sales by 2027. The top opportunities in the algorithmic trading market segmented by type of traders will arise in the institutional investors segment, which will gain $6,172.3 million of global annual sales by 2027. The algorithmic trading market size will gain the most in the USA at $4,325.9 million.

Market-trend-based strategies for the algorithmic trading market include focus on use of artificial intelligence (AI) to capitalize on the data from digitally driven channels, focus on collaborations and acquisitions to improve their financial strength, product portfolio and geographical presence, focus on new technologies and developing technologically-advanced solutions to strengthen their position in the market, focus on product innovations and developing new product solutions to grow in the market and focus on cloud-based algorithmic trading to increase their productivity and efficiency.

Player-adopted strategies in the algorithmic trading market include focus on providing world-class execution solutions through strategic collaborations and partnerships and enhancing operational capabilities through strategic acquisitions.

To take advantage of the opportunities, the analyst recommends the algorithmic trading companies to focus on cloud-based algorithmic trading, focus on technological advancements, focus on product innovations, expand in emerging markets, continue to focus on developed markets, focus on partnerships and collaborations, provide competitively priced offerings, continue to use B2B promotions, and continue to focus on fast-growing types of traders.