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22nd February 2023 | Press Releases

Proprietary trading firms see opportunity in interest rates but liquidity concerns grow

London – 22 February 2023: Proprietary trading firms see the most potential for profit in 2023 in interest rate derivatives, but liquidity is a growing challenge in the market, the latest Acuiti Proprietary Trading Management Insight Report has found.

The report, which is based upon a quarterly survey of the Acuiti Proprietary Trading Expert Network, a group of over 100 senior proprietary trading executives from across the globe and produced in partnership with Avelacom, found that listed interest rates was the asset class that respondents believed had the most potential in 2023.

Energy, equity options and commodities were also seen as having significant potential. Just under half of respondents saw opportunities in crypto currencies despite the significant price declines and market turmoil experienced in 2022.

However, despite the opportunity in interest rates, members of the expert network raised concerns over liquidity in European markets. Liquidity was seen to have deteriorated most in Gilts contracts, with 38% of respondents noting this trend.

Members of the expert network pointed to increased incentives for proprietary trading firms and higher retail participation in the market as the two main potential solutions to grow liquidity in rates markets.

Other findings in this report include:

  • 2022 was a very strong year for proprietary trading with a third of the network reporting a very good or exceptional year.
  • Cost bases grew for most firms in 2022 with staffing and market data fees rising at the fastest pace.
  • TradFi prop firms that trade crypto are taking out default insurance and reducing the number of exchanges they trade on in the wake of the collapse of FTX.
  • Passive liquidity schemes, such as speed bumps, have generally been seen as positive by the market.

Aleksey Larichev, CEO of Avelacom said: “Proprietary trading firms the majority of Avelacom’s client base and it is heartening to see our clients reporting that they have had a strong year. Understanding their sentiment and mood towards particular asset classes and markets helps us to anticipate and develop our network infrastructure accordingly and be first in providing best-in-class low latency solutions that they require across all markets. In 2022 we extended our presence in the Middle East, Asia Pacific, and Latin America to provide more opportunities in most asset classes, including cryptocurrency.”

Ross Lancaster, Head of Research at Acuiti, said: “2022 was a strong year for proprietary trading firms and the macroeconomic environment points to another strong year in 2023,” says. However, while interest rates provide significant opportunities this year, concerns around liquidity are growing. This is particularly acute in the UK where the number of options market makers has fallen dramatically in recent years.”

Download full report here.




For more information, contact Nastja Konic at Acuiti

Tel.: +44 (0) 203 998 9190

Email: nastjakonic@acuiti.io



About Acuiti

Acuiti is a management intelligence platform designed to provide Senior Industry Professionals in the Derivatives Industry with high-value insight into industry-wide performance and business operations. Acuiti provides a platform through which our exclusive network of Senior Industry Executives can share and source information on day-to-day operational challenges, providing them and their management teams with increased transparency and in-depth analysis to make more informed decisions and benchmark company performance. Financial Institutions benefiting from our services include Banks, Non-bank FCMs, Brokers, Proprietary Trading Firms, Hedge Funds and Asset Managers.


About Avelacom

Avelacom’s low latency connectivity, IT infrastructure and data solutions improve market making, arbitrage and liquidity aggregation strategies, all of which are highly sensitive to latency. It provides access to 80+ liquidity centers offering best-in-market latencies and 99.9% uptime. Covering a wide variety of exchanges including equity, FX, commodity, crypto and derivatives, Avelacom’s solutions are asset neutral.

The company is particularly well known for offering the lowest latencies to/from APAC, LATAM, the Middle East, South Africa and Eastern Europe. The company’s strength comes from its own global network based on both fiber and wireless technologies.