A widening probe of the foreign-exchange market is roiling an industry already under pressure to reduce costs as computer platforms displace human traders.
Electronic dealing, which accounted for 66 percent of all currency transactions in 2013 and 20 percent in 2001, will increase to 76 percent within five years, according to Aite Group LLC, a Boston-based consulting firm that reviewed Bank for International Settlements data. About 81 percent of spot trading -- the buying and selling of currency for immediate delivery -- will be electronic by 2018, Aite said.
“Foreign-exchange traders are much like stock floor traders: a rapidly dying breed,” said Charles Geisst, author of “Wall Street: A History” and a finance professor at Manhattan College in Riverdale, New York. “Once the banks realize they are costing them money, the positions will dwindle quickly.”
At least a dozen regulators are investigating allegations first reported by Bloomberg News in June that traders colluded to rig benchmarks in the $5.3 trillion-a-day currency market. That scrutiny may give banks an opportunity to cull more staff, say analysts including Christopher Wheeler of Mediobanca SpA in London. It’s also boosting demand from clients for greater transparency in pricing and transaction charges, accelerating a longer-term shift in trading onto electronic platforms.
“The margins are very, very skinny in foreign exchange because it’s easy to move onto a trading platform,” said Wheeler, who tracks European lenders. “The move by banks into electronic trading in other areas has cost a large number of jobs, and we’ve seen revenue come off sharply. The foreign-exchange probe won’t help this.”...MORE
Wednesday, February 19, 2014
Jobs the Robots Will Do: Foreign Exchange Traders Facing Extinction as Computers Replace Humans