How do you interpret these results?
Once again, let’s look at it from a historical perspective. The electronification and digitalization of trading and all associated processes has allowed standardization and scale, leading to lower transaction costs. The ensuing spectacular growth of trading volumes and transaction numbers was witnessed first-hand at the Swiss stock exchange, having been the trailblazer of this development. Simply put: more efficient trading is better trading, for participants, asset managers and end investors alike.
It’s the same story with Algo trading so far: it hasn’t replaced previous forms of trading, because they continue to reflect specific needs of certain market participants. For example, to some trading members certainty of execution is more important than pure speed of execution. Algo trading is therefore complementary to “traditional” trading, for lack of a better word. It makes the overall trading cake bigger, which provides more opportunities to everybody.
Speaking of growth: auction trading volumes have increased over the last 5 years. How will demand develop in the future?
According to our traders, less than 5% of respondents believe it will decline. The clear majority – 57% percent to be exact – expects auction volumes to increase, leaving 38% with a neutral view. This growth expectation matches the findings of various pieces of research we published since 2020 which highlighted that the closing auction has become a very significant liquidity event. It establishes an essential industry performance and valuation benchmark – the official closing price – and trading residual liquidity at a fixed price is clearly a client need.