Prop Firms Look to FX in 2024: Survey

Just a few months after posting a survey that saw FX as one of the most challenging markets for prop trading firms, the latest Acuiti Proprietary Trading Management Insight Report finds that these same firms are living up to the reputation for short-term trading by swinging behind the asset class in 2024.

The latest report report, based upon a survey of 100 executives at prop trading firms, found that 45% of firms that trade FX were planning to significantly increase exposures in the asset class in 2024. Firms were also planning growth in equity options.

Conversely, almost a fifth of firms, mostly from Europe, and which traded cash equities, were planning to decrease exposures in the asset class. In terms of new asset classes, several firms were planning to expand into cash government bond markets. The report also finds that investment budgets are also set to increase in 2024 with 63% of firms planning higher than average investments. Firms were most likely to be investing in algorithmic trading tools, connectivity to new markets, and market data, the survey, which was conducted in association with connectivity provider Avelacom, found.

Rising exchange fees could be behind the shift away from cash equities and towards FX, the report cites this as negatively impacting what markets and products firms trade.

“The report reveals that proprietary trading firms are willing to invest in improving their connectivity to markets, including exploring new ones,” says Aleksey Larichev, managing director at Avelacom. “This shows their plans to expand and optimise their current trading setups. It’s a positive sign that the market is in good shape and working to stay competitive.”

Will Mitting, founder of Acuiti, adds, “Proprietary trading firms are looking ahead to 2024 with optimism and planning expansion and increased investment, however, exchange costs are an increasing burden for many firms, which are trading fewer products and markets than they would if fees were lower.”