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Bailey McCann, Opalesque New York:

"Futures markets are about to become a lot more competitive," Matthew Simon, senior analyst writes in a new study of futures markets from US-based, strategic advisory and research firm Tabb Group. US buy-side firms are increasing their use of electronic trading tools for futures trading as their volumes continue to grow and they look for more efficient execution processes. Buy-side traders are embracing DMA and algorithmic-trading channels with volume routed through these channels accounting for the vast majority of trading, as much as 87%.

"Futures trading is a focus point for large buy-side firms – traditional long-only asset managers, hedge funds and commodity trading advisors (CTAs) – that are seeing growing volumes and making the requisite investments into automated solutions to self-direct more of their order flow, trade more efficiently, minimize trading costs and execute more complex trading strategies," Simon writes.

Hedge fund speculators are also rebounding in the space. Traditional investment managers are finding increased competition from hedge funds which have the flexibility to go both long and short. Institutional investors such as pension funds are allocating more to CTAs, seeking the bigger returns found in futures markets as well as capital preservation. All of these factors are adding to overall volumes in the space.......................

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