OTC derivatives reform will lead to algo boom, banks predict

dynamic explosion
Banks predict algo trading boom

Market reforms currently being implemented in the derivatives market will lead to a dramatic rise in the use of algorithms to execute over-the-counter trades, dealers predict. A requirement in the Dodd-Frank Act for all clearing-eligible contracts to be traded on swap execution facilities (Sefs) means the lion's share of OTC volumes will flow through an array of new electronic trading venues in future. As a result, standardised trades will be more common and the bid/offer spreads will be tigh