Reliable sources of liquidity are at the top of traders’ minds as they brace for another year of turbulence, according to a JPMorgan Chase & Co. electronic trading survey.

Volatile markets are predicted to be the greatest daily challenge for a second year in a row, the annual poll of institutional traders found. Access to liquidity is the biggest concern about market structure, ahead of regulatory change and data costs.

While volatility across asset classes remains relatively contained compared to recent gyrations, the worry is that it could spike if the global economy faces another shock. Markets are pricing in over a percentage point of interest-rate cuts from the Federal Reserve and European Central Bank, though the survey still sees inflation as having the biggest impact on markets in 2024. In second place is the US election — with a flurry of other votes due around the world as well, plus mounting geopolitical risk.

Chi Nzelu, JPMorgan’s global head of macro e-trading, said in some cases traders are looking to condense their liquidity providers to a smaller number of “trusted counterparties in the event you need to move significant size in volatile markets.”

“Clients remain focused on who they can rely on and what platform to use if they see volatility, which everyone expects throughout this year,” he said in an interview. “If you look back in recent history, there is always liquidity and tight bid-offers when volatility is low. Clients need to know their liquidity availability remains reliable.”

The number of respondents to the survey of 4,010 is up almost fivefold from last year and now represents a broader range of asset classes, with previous polls dominated by FX traders. That reflects how e-trading terminology has now become “almost ubiquitous” across asset classes and suggests how “over time trading electronically will become synonymous with trading,” said Eddie Wen, the bank’s global head of digital markets.

“I find it interesting that a lot of the concerns people have are more in their control than they may think, like access to liquidity and market structure: where to trade and how to trade,” he said. “Execution costs are important. The reality is that the world is becoming more competitive. Margins across the industry are becoming thinner and thinner. Costs that in the past may not have been so relevant because margins were wider have now become a critical focus.”

All respondents said they expect to increase their electronic trading activity, JPMorgan said. Corporate bonds are predicted to have the most developments in electronic trading, followed by exchange-traded funds and government debt. However, 78% of institutional traders said they have no plans to deal in cryptocurrencies, up sharply from around a quarter two years ago, showing cooling interest after a year that saw FTX founder Sam Bankman-Fried convicted of fraud.

On technology, traders once again placed artificial intelligence and machine learning as the most influential in shaping the future of trading. That beat Application Programming Interface (API) integration, which allows apps to work with each other, and blockchain technology.

“As adoption of AI becomes more prevalent, the ability to trade on news, the ability to digest information on things that are written as opposed to just raw data, could become vital to trading strategies,” said Wen. “That could have a significant impact on market volatility and how we treat ‘news-like data,’ toward the same way we historically feed ‘market data’ into market-making machinery.”