Algorithmic trading in Foreign Exchange: Increasingly sophisticated

With algorithmic trading increasingly on the rise as technology becomes more sophisticated, find out the latest developments and trends in the FX markets.


Operating globally around the clock, the market for foreign exchange (FX) trading is an over-the-counter (OTC) market. Through innovation, new trading venues, actors and execution methods have emerged. Over the past 20 years, the Bank for International Settlements (BIS) estimates that the share of global FX trading conducted by financial customers has risen to circa 50%, driven by the emergence of a large number of alternative trading platforms and principal trading firms. In the spot FX market, algorithmic trading is now almost at 75% (BIS 2022).

There are a number of explanations for the broad adoption of algorithms. These include increased working from home during the COVID-19 pandemic, the rapid rise of retail trading, increased regulatory oversight, the introduction of best-execution requirements, the capacity to analyse huge volumes of data, and increased adoption of ML, AI, and Cloud-based solutions. Indeed, in The Trade’s 2022 Survey of Long Only investors, buy-side trading desks confirmed trading 57% or more of their overall portfolios algorithmically, up from 49.22% in 2021 and 49.41% in 2020.

Global foreign exchange turnover in spot markets

Net-net basis

Daily averages, in millions of US dollars

Source: BIS Triennial Central Bank Survey 2022
Total electronic spot trading volume

Daily averages, in billions of US dollars

Source: BIS Triennial Central Bank Survey 2022; EBS; Refinitiv; BIS Working Paper: The foreign exchange market (

Leading FX market innovation

As the market increases in sophistication, customers are increasingly diversifying their execution styles by combining low-touch and high-touch execution models. With low-touch better suited to liquid smaller-sized tickets and increasingly executed via automated dealer selection tools, trading desks can free up time to focus on more complex trades or high-touch styles.

As the relationship with the dealers becomes focused on more complex trades, including larger sizes or less liquid instruments, customers are increasingly relying on pre-trade analytics, smart order routing and execution algorithms. The increased availability of data from algorithmic trading has raised client expectations around outcomes they can expect to achieve, and banks and technology providers continue to develop increasingly sophisticated technology. 

Today’s algorithmic trading offerings include more sophisticated features:

  1. Analyses large amounts of data, optimising price discovery and smarter access to liquidity;
  2. Generates cost savings by minimising spreads and market impact;
  3. Delivers on regulatory requirements, including best execution objectives;
  4. Introduces trading desk operational efficiencies;
  5. Leaves transparent audit trails.

Automating complex workflows

In a recent issue of FX Algo News (p.8-11), Asif Razaq, Global Head of FX Automated Client Execution at BNP Paribas, shared his views on the latest trends in FX algorithmic trading.

Razaq highlighted BNP Paribas’ strategy of focusing on a few, highly advanced core algorithms, meeting client requirements on delivering ease-of-service for users with automated end-to-end services, including pre-trade workflow analysis, real-time through-trade monitoring and post-trade analytics and reporting.

According to Razaq: “BNP Paribas’ highly advanced core algorithms cater for 90% of client execution needs today. Being able to meet their full requirements through customised add-ons, automated pre and through-trade workflow monitoring and execution, and post-trade data analytics, is the best way we can deliver for our clients.”

Asif Razaq

BNP Paribas’ highly advanced core algorithms cater for 90% of client execution needs today.

Asif Razaq
Global Head of FX Automated Client Execution, BNP Paribas

Access to information shapes trading in all assets, and Razaq discussed the launch of BNP Paribas’ fifth-generation algorithms, one of the Bank’s most advanced developments that leverages the latest FX technology to automate and streamline complex client workflows. Razaq highlights the latest fifth-generation algorithm, Rex, a portfolio hedging or basket algorithm designed for clients who typically do not have just one currency pair to execute, but five or six.

“This takes optimising client executions one stage further. Rex can automate the entire workflow, construct a project plan for the client and show them how they can use algorithms in a collective, daisy chain fashion,” says Razaq. “The uptake from clients has been really positive. We’re now brainstorming with clients on other ideas and other complex workflows that we can help automate.”

Client feedback on the proprietary algorithms traded through BNP Paribas’ flagship trading solution, Cortex iX, with help from ALiX, the Bank’s FX digital trading assistant, included their adaptability to a variety of trading solutions, the ability to provide mid-flight information, control of execution, and access to large pools of liquidity. BNP Paribas was recently awarded Best Algo Provider 2023 by FX Markets for the third consecutive year.

An opportunity for corporate clients

While the use-case for algorithmic trading for institutional investors is clear, the opportunity for corporate treasurers with predictable currency hedging needs is vast. Instead of resorting to traditional risk-transfer trading, where bank counterparties get paid for bearing the execution risk, corporate treasurers ready to adopt passive algorithmic execution methods can generate cost savings. Breaking up orders into multiple child orders optimises price discovery, reduces information leakage and minimises market impact, ultimately achieving tighter spreads.

FX Market Awards | Best algo provider

Technology at its core

Under BNP Paribas’ 2025 growth strategy, the Bank aims to accelerate technological innovation and cross-business collaboration in order to enhance customer experience and provide best-in-class capabilities to its clients.

BNP Paribas’ newly formed Global Macro business offers the full spectrum of products across FX, Rates and Commodities in both developed and emerging markets, from millisecond electronic trading supported by the most advanced AI platforms, through to long-dated, high-touch solutions.

By deepening the integration between the Bank’s business and technology, and increasing its internalisation, BNP Paribas is able to leverage its liquidity pools and provide optimised pricing. With access to BNP Paribas’ algo execution suite, Cortex iX, alongside the Bank’s in-house analytics tools, Insight Live and ALiX, BNP Paribas has pioneered a marketing leading algo offering to meet the growing needs in algo execution.