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#1 02-12-2018 18:35:48

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Is automatisation going to be the death of forex dealing desks?

Is automatisation going to be the death of forex dealing desks?

Article originally appeared on financemagnates

This is the last of 4 articles on staffing issues in the forex industry. Read the first article here, the second one here and the third one here.

Technology has totally changed modern society – the way we live, the way we work. You name it and technology has made an impact. The same, of course, can be said of the foreign exchange (forex) industry – particularly in regards to automation, artificial technology, blockchain and more.

Automation, in particular, is increasingly present – not just in the forex industry, but in the wider job market. With robots replacing workers and the value of certain trades and skills becoming less and less needed, it is changing the global market as we know it.

So how is this relevant to the forex industry? Well, it is becoming clear that automation is going to change the structure of brokerages. It may even be the death of some departments and professions within the forex industry.

The way that brokers are structured

Broker structures clearly vary from broker to broker. Are they an institutional broker, retail, commodities, forex or a combination? The purpose of the broker has a large impact on its set up. However, there are certain departments that are consistent across pretty much all brokers.

Generally, a broker will have a compliance department and, depending on how big it is, a separate legal department. Like many companies, there will be an accounting and finance team, IT and engineering, customer support, human resources and, of course, the sales department.

Boston Tech, a provider of software and trading platforms to institutional and retail forex brokers, provided the below as a general outline of how a mid-sized broker is structured. The company deliberately excluded a development team, as the structure assumes the broker outsources this department.

Typical structure of a mid-sized forex broker

Some of the more recent departments that are becoming consistent across brokerages is a marketing and/or PR department. In recent years, there has been a notable uptick in the number of marketing and communication roles. Particularly those with a focus on SEO, social media and content. This is, of course, the direct result of the growing importance of social media and online marketing in our society.

Another department to grow in popularity is the retention department. This department solely focuses on keeping clients of the firm and is separate from the sales team, as their priority is more on keeping relationships in place rather than attracting new clients.

While some departments are growing in their importance the structure is more or less the same as it was 4 years ago.
What does automation mean for the forex industry?

It means a lot of things. Automation is changing the industry, from fast and accurate executions of trades, quick transactions and instant identify verification. Large investment banks such as JPMorgan, the largest FX dealer by global volume, are making big steps in automation. This year, news broke that JP Morgan was developing a sort of trading robot with artificial intelligence. This will execute trades in place of human traders.

At the beginning of 2017, it was also revealed that Goldman Sach’s New York headquarters fired 600 traders and replaced them with around 200 computer engineers who are overseeing automated trading programs.

Ioanna Vlassi, an executive director and owner of Unirec, a firm specializing in strategic consulting and executive searching in finance and fintech, told us: “Automation is also totally essential”.

She highlights that automation is a must for being relevant in Asian-based markets and a rising trend in Europe, noting that technology in the forex industry in countries such as the UK is rapidly growing. However, automation isn’t cheap. It requires IT infrastructure, research and development teams. Whilst in the long run automation does reduce costs, brokers need to be willing to front the expenses now for future perks.

So while automation definitely does affect the forex industry, there’s no need to expect things to change overnight.

Is it time to say goodbye to dealing desks?

One thing that does look probably, though, is the eradication of dealing desks. Brokers all over Europe are now investing more time and resources to have these processes automated, saving them time and money in the long run.

Specifically, Vlassi revealed: “We will see possibly the extinction of the dealing desk within the following years, there will be an automated procedure. It will be covered from the systems, the dealer.

However, Vlassi points out that dealing desks will remain part of large investment banks for a while. This is because these financial institutions are slower to change their systems. So what does this mean for professionals about to start their career in the forex industry? Well, perhaps it’s not the best decision to go into dealing.

I think if anyone wants to be a dealer, maybe they should rethink their agenda… It’s going to be automated from what I see. So it’s going to be extinct the next couple years I think… It’s already starting to happen,” Vlassi added.

"Anything worth having is worth going for - all the way." - J.R. Ewing


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