In aproactive move signaling confidence in the financial markets, proprietarytrading firms globally are poised to scale up their foreign exchange (FX)trading activities and boost investment budgets in 2024. This development stemsfrom findings in the latest Acuiti Proprietary Trading Management InsightReport, unveiled today (Monday).
The report,a collaborative effort with Avelacom and produced after surveying seniorexecutives from over a hundred proprietary trading firms, paints a picture of asector on the brink of significant growth.
With 45% ofFX trading entities looking to substantially up their game in the asset class,and a keen interest in equity options, the landscape for 2024 shows a bullishtrend. Conversely, cash equities seem to be on a downtrend, especially inEurope, where a notable fraction of firms intend to pare down their exposure.
"Thereport reveals that proprietary trading firms are willing to invest inimproving their connectivity to markets, including exploring new ones," AlekseyLarichev, the Managing Director at Avelacom, commented.
Furtherdiversification is evident as several firms set sights on the cash governmentbond markets, indicating a strategic move to broaden their trading spectrum. A considerable63% of these firms are ready to allocate above-average resources towardadvancements in algorithmic trading, market access, and data acquisition.
Acuiti's July research pointed out that traders and proprietary trading firms aim to ride the waves of volatility precisely in themost volatile markets where the highest activity is observed.
"Thisshows their plans to expand and optimize their current trading setups. It's apositive sign that the market is in good shape and working to stay competitive,"Larichev added.
One ofAcuiti's earlier reports suggested that trading firms are increasingly lookingtowards Asia in search of new markets.
Rising Fees and FutureRegulatory Changes
Yet, it'snot all smooth sailing. The report underscores the strain of rising exchangefees which are constricting the range of markets and products firms are willingto trade. For many proprietary trading companies, these costs represent asignificant and increasing burden.
Nine out often survey participants have reported a rise in exchange fees over the pastfive years, with nearly all of those not facing higher fees being primarily orexclusively involved in cryptocurrency trading.
"Exchangecosts are an increasing burden for many firms, which are trading fewer productsand markets than they would if fees were lower," said Will Mitting, theFounder of Acuiti.
Adding tothe complexity is the low awareness of the EU's impending Digital OperationalResilience Act, set to take effect in 2025, which could have significantcompliance implications for the firms.
Amidstthese challenges, the report captures a sector in dynamic flux, with over halfof the firms trading equity options contemplating 0 Days to Expiration (0DTE)strategies on Eurex, signaling a potential uptick in the product's trade volumecome 2024. 0DTE refers to options contracts that expire on the same day theyare traded.
In itsreport from the end of October, Acuiti also indicated that there is a noticeable consolidation trend in the FX prime brokerage industry, especially in hedge funds. The study highlighted thegrowing concerns among fund managers about adverse changes occurring in thesector.
In aproactive move signaling confidence in the financial markets, proprietarytrading firms globally are poised to scale up their foreign exchange (FX)trading activities and boost investment budgets in 2024. This development stemsfrom findings in the latest Acuiti Proprietary Trading Management InsightReport, unveiled today (Monday).
The report,a collaborative effort with Avelacom and produced after surveying seniorexecutives from over a hundred proprietary trading firms, paints a picture of asector on the brink of significant growth.
With 45% ofFX trading entities looking to substantially up their game in the asset class,and a keen interest in equity options, the landscape for 2024 shows a bullishtrend. Conversely, cash equities seem to be on a downtrend, especially inEurope, where a notable fraction of firms intend to pare down their exposure.
"Thereport reveals that proprietary trading firms are willing to invest inimproving their connectivity to markets, including exploring new ones," AlekseyLarichev, the Managing Director at Avelacom, commented.
Furtherdiversification is evident as several firms set sights on the cash governmentbond markets, indicating a strategic move to broaden their trading spectrum. A considerable63% of these firms are ready to allocate above-average resources towardadvancements in algorithmic trading, market access, and data acquisition.
Acuiti's July research pointed out that traders and proprietary trading firms aim to ride the waves of volatility precisely in themost volatile markets where the highest activity is observed.
"Thisshows their plans to expand and optimize their current trading setups. It's apositive sign that the market is in good shape and working to stay competitive,"Larichev added.
One ofAcuiti's earlier reports suggested that trading firms are increasingly lookingtowards Asia in search of new markets.
Rising Fees and FutureRegulatory Changes
Yet, it'snot all smooth sailing. The report underscores the strain of rising exchangefees which are constricting the range of markets and products firms are willingto trade. For many proprietary trading companies, these costs represent asignificant and increasing burden.
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Nine out often survey participants have reported a rise in exchange fees over the pastfive years, with nearly all of those not facing higher fees being primarily orexclusively involved in cryptocurrency trading.
"Exchangecosts are an increasing burden for many firms, which are trading fewer productsand markets than they would if fees were lower," said Will Mitting, theFounder of Acuiti.
Adding tothe complexity is the low awareness of the EU's impending Digital OperationalResilience Act, set to take effect in 2025, which could have significantcompliance implications for the firms.
Amidstthese challenges, the report captures a sector in dynamic flux, with over halfof the firms trading equity options contemplating 0 Days to Expiration (0DTE)strategies on Eurex, signaling a potential uptick in the product's trade volumecome 2024. 0DTE refers to options contracts that expire on the same day theyare traded.
In itsreport from the end of October, Acuiti also indicated that there is a noticeable consolidation trend in the FX prime brokerage industry, especially in hedge funds. The study highlighted thegrowing concerns among fund managers about adverse changes occurring in thesector.
