US equities embrace algorithmic trading

Algorithmic trading has hit the mainstream in the US equities market as companies look to boost operational efficiency.

Financial research company Aite Group said algorithmic trading was becoming the execution tool of choice for both sell-side and buy-side traders. It predicted that by the end of 2006 algorithmic's share of total equities trading volume would approach 33%, and be around 53% by the end of 2010.

Brad Bailey, a senior analyst at Aite, said, "The role of the buy-side trader has become very complicated. The landscape for trading is evolving quickly, as are algorithms."

Aite said the adoption of first-generation algorithms seemed to be nearing its end in the US market. According to Aite, most brokers have now moved on to develop more sophisticated algorithms capable of supporting portfolio trading, while adapting to real-time changing market conditions.

Comment on this article: computer.weekly@rbi.co.uk