Though using multiple brokers for algorithms is of course the norm, The TRADE’s 2025 Algorithmic Trading Survey, Long-only, reported a decline in average numbers of algo provider numbers for the first time since 2021.
The biggest decline was seen in firms with $10 billion – $50 billion AUM who were found to be using around one less provider – averaging four per firm.
Notably, whilst a decline was seen across the majority of AUM bands, two exceptions saw a small increase – firms with $0.5 – $1 billion in assets under management, and those with less than $0.25 billion AUM.
Demonstrably, as was the case with past surveys, there remains a strong correlation between number of providers used and a firm’s assets under management.
Larger buy-side firms are continuing to diversify more and more, moving into asset classes beyond merely equities – namely fixed income and FX in particular – in light of increasingly unpredictable markets and regulatory uncertainty, a trend showing no signs of letting up.
This volatility has informed the increased investment in algorithmic trading providers, however the slight decline seen in the number of providers can fairly be attributed to the continually relevant topic of cost-cutting.
When it comes to the factors for algorithmic usage, The TRADE’s respondents maintained that the top motivations were ‘ease of use’, ‘consistency of execution performance’, ‘reduce market impact’ and ‘increase trader productivity’.
However, the heightened pressure on buy-side traders to lower both explicit and implicit trading costs saw ‘lower commission rates’ and ‘price improvement’ experience the highest increase in responses.
Read more – Beyond the Data: Long-only managers more optimistic than ever when it comes to their algo providers
Elsewhere, the survey found that there is a clear bifurcation in the industry between long-only firms who use five or more algo providers, and those who use just one.
Specifically, when lifting the veil of AUM, overall, 33% of firms use more than five providers, whilst 31% use just one.
The clear assumption being that those with a smaller pool are the smaller firms with more specific trading remits, though the market norm remains that almost 70% of firms leverage more than one provider.
Given the current state of play of the markets, despite a slight decline this time around, it is fair to infer that the average number of algos used should remain largely unchanged for the foreseeable.