Institutional FX trading firms are accelerating investment in advanced technologies as they prepare for rising volumes and increasingly fragmented liquidity, according to a new report by Acuiti in partnership with Avelacom.
The study, titled FX Trading in 2025: Growth Amid Fragmentation, AI and the Shift to Direct Connectivity, found that 82% of survey respondents expect spot FX trading volumes to increase over the next 12 months.
The report, based on a survey of senior executives at 68 proprietary trading and sell-side firms, outlines how firms are prioritizing technology investments to adapt to these shifts and maintain a competitive edge in a rapidly evolving marketplace.
Artificial intelligence and machine learning are emerging as the most transformative technologies within institutional FX trading with 51% of survey respondents anticipating that AI and ML will drive the market’s technological advancements.
Survey respondents consistently ranked AI as the technology expected to have the greatest impact on the market over the next three years, particularly in non-trading operations. The growing array of AI use cases—ranging from real-time data analytics and anomaly detection to smarter algorithmic execution—has shifted AI from a future-looking concept to a current strategic imperative. Nearly one in five participants in the study described AI’s potential as “game-changing,” reflecting the fast pace of adoption and the increasingly clear ROI associated with these technologies.
AI is being deployed to reduce inefficiencies, particularly in areas that continue to strain under the pressure of high trade volumes. Straight-Through Processing (STP), while now widely adopted across the industry, still buckles during periods of intense activity, prompting firms to invest in more powerful and intelligent systems to ensure smooth trade lifecycle management. By embedding AI into middle- and back-office functions, firms are seeking to streamline compliance checks, accelerate reconciliation, and optimize settlement workflows—key pain points as the scale and complexity of trading operations continue to grow.
Parallel to the adoption of AI is a significant trend toward enhanced control over connectivity infrastructure. The study found that over a quarter of firms currently reliant on third-party platforms for liquidity sourcing are planning to invest in direct market access and establish proprietary connectivity to trading venues. This shift is motivated by a desire for lower latency, improved execution quality, and greater control over routing decisions—especially critical in an environment where liquidity is becoming more fragmented and the window for execution is narrowing.
“FX markets have seen considerable growth in recent years, and expectations of a sustained increase in volatility, driven by geopolitical tensions and uncertainty around tariffs, are fuelling anticipation of a new boost for trading volumes,” said Ross Lancaster, Head of Research at Acuiti. “Our survey found that firms are looking to capitalise on the opportunities that growth brings by taking greater control of their trading infrastructure leveraging advances in technology from AI to the cloud.”
The rise of direct connectivity—often via APIs and in-house systems—is particularly pronounced among high-frequency trading firms but is also gaining traction among brokers and market makers aiming to reduce their dependency on intermediary platforms. This approach enables faster execution and increased flexibility in how firms interact with liquidity sources. “Given the volatility in global FX markets, it makes sense that FX traders are looking to have more control over their connectivity,” said Alexey Larichev, CEO of Avelacom. “Direct connectivity, with low latencies, will also allow them to take advantage of the further growth they expect to see in FX volumes.”
Cloud technology is also playing a central role in this infrastructure overhaul. Among firms currently investing in infrastructure, 88% reported they are pursuing cloud-based solutions over traditional on-premise setups. The appeal of the cloud lies in its scalability and agility—enabling firms to dynamically adjust their computing power and storage capacity based on market demands. Cloud environments also support faster deployment of new tools and reduce the overhead associated with maintaining physical hardware.
That said, adoption patterns are still mixed. While cloud-first strategies dominate among firms building new systems, a significant portion of the broader market continues to rely on hybrid architectures that combine cloud capabilities with legacy on-premise infrastructure. This hybrid approach reflects ongoing challenges related to regulatory compliance, data sovereignty, and the need to maintain compatibility with older systems. However, the report notes a clear directional trend toward cloud adoption as firms become more comfortable with its reliability and security, especially given the increasing involvement of major cloud providers like AWS, Google Cloud, and Microsoft Azure in financial markets infrastructure.
Automation, AI, and cloud are not only enhancing core trading operations but also addressing some of the biggest structural challenges facing FX firms today. High operational costs remain the top concern, particularly among proprietary trading firms and institutional brokers with more limited budgets. Liquidity constraints, especially among brokers, were also identified as a major challenge, underscoring the importance of smarter execution models and adaptive connectivity strategies. For multinational banks, the most pressing issue was competition from non-bank liquidity providers, who have gained significant market share through aggressive use of technology and efficient pricing models.
The study makes it clear that even in a highly electronified market like FX, the drive for innovation is far from over. Technology is no longer a supportive function—it is the foundation of strategy and competitive differentiation. With the volume and complexity of global trading set to expand further, firms that invest in AI, direct connectivity, and scalable infrastructure today will be the ones best positioned to lead tomorrow.
As Lancaster concluded: “Whether through AI, direct connectivity, or the cloud, the future of FX trading will be defined by those who can innovate while navigating growing complexity.”
