JP Morgan has released the results of its e-Trading Trends for 2018 survey, which was taken among more than 400 institutional traders – the majority being FX – in October 2017.
The survey indicates strong growth in the use of mobile trading apps as well as renewed optimism that client uptake of algorithmic execution strategies will emerge in 2018.
The headline finding from the survey is that 61% of respondents say they are likely to use a mobile app for FX trading, more than double the 31% who said the same in the 2017 survey. 37% of overall respondents say they are “extremely likely” to use an app, while 24% say they are “somewhat likely” to trade on the go (both percentages are almost double those in the 2017 survey).
Mobile trading has been on the increase in recent years according to anecdotal evidence gathered by Profit & Loss as part of its annual single dealer platform survey, indeed several banks – including JP Morgan – have previously reported a number of trades in excess of $100 million, as well as large gamma trading programmes using mobile devices.
Inevitably the biggest block to using a mobile app is a company’s compliance policy, 50% cited their company’s policy on mobile trading as the top barrier to the practice, while 34% cited their company’s total ban on the use of mobile devices.
Proponents of mobile trading will be heartened by the increased usage of devices. There were fears in the industry that the chat room scandal and the subsequent clamp down on any device that can transmit information would lead to a contraction in mobile app usage. Greater operational security around not only the mobile app’s use, but also tighter controls on access to mobile trading probably contributed to the surge in interest. While there is still the fear of the “fat finger” trade or usage by a non-authorised person who gains access to the mobile device, market participants, and more importantly their oversight functions, seem comfortable that with the operation controls in place.
Half of respondents cited the ability to sync orders with their desktop as the most important capability of a mobile app – again this speaks to the need for operational efficiency and transparency of action – while 54% say the access to market data is most important.
Although the number is still relatively small, there is good news in the survey for those pushing the use of algorithmic execution strategies, for while only 8% of respondents currently use algos as their primary trading method, JP Morgan says the net percentage of those planning to increase usage in 2018 is up 24%.
A big driver of this usage is, inevitably, likely to be MiFID II, which went live at the start of this year and the JPM survey would appear to back that up. Almost two-thirds (61%) of respondents say that MiFID II will have a day-to-day impact on how they trade. Although MiFID II is a European regulation, its global impact is highlighted in the survey, for while 73% of respondents in EMEA belief it will have an impact, 47% of respondents in the Americas and 45% in Asia-Pacific also hold the same view.
Moreover, 40% of respondents believe MiFID II will alter their use of e-channels for trading (it is important to reiterate the majority of respondents were FX traders).
Again offering hope for algo service providers, 33% believe MiFID II will alter the type of orders they use (32% believe it will bring greater transparency, 13% that it will strengthen the service from their banks and 7% that it will increase their own firm’s efficiency).
In broader macro trends, the survey finds that market structure changes are the major issue faced by institutional traders, with 37% citing that, while 27% cite the geo-political events and 25$ global economic uncertainty as their biggest concern.
In terms of the biggest daily trading requirements, the survey finds that 37% are focused on best execution, 29% on the availability of liquidity, 17% on efficiency of process and 16% on price transparency.
Highlighting the continued importance of the single dealer platform to a bank’s FX business, the survey finds that 31% of respondents use a single dealer platform only, while 12% only use a multi-dealer platform and 57% use both.