London — A new breed of trading algorithms has deftly navigated the turbulence in currency markets caused by the coronavirus pandemic, driving up demand for robots and potentially reshaping the world of foreign-exchange dealing beyond the crisis.
“We've actually seen the opposite. Our algo volumes are up between 150% and 200% on the daily average,” he said, against a double-digit rise in broader forex trading volumes at the bank. “We were not expecting to see this much of an increase.” Beyond the pandemic, more sophisticated robots could accelerate the adoption of algorithms in the $6.6-trillion-a-day forex market, where computer-driven trading has been far slower to catch on than in stocks.
Algos have also evolved from basic commands that split large orders into chunks, to the latest generation that scan trading venues for the best prices while feeding information to investors in real time, said Chi Nzelu, head of macro ecommerce at JPMorgan. He gave the example of sterling; when volatility eclipsed many riskier emerging market currencies in March as the pound hit 35-year lows, the algos continued to trade comfortably.However Richard Purssell, head of currency trading at London-based Insight Investment, which manages £660bn in assets, said he had increased the use of forex algorithms in March and that they had outperformed.
This was evident during the Brexit negotiations when, in the absence of concrete developments, news-reading algorithms struggled to extract useful signals from the words of myriad public figures.