Foreign exchange trading is back at the forefront of opportunities for banks following a volatile six months, but it will take a combination of automation investment and personal supervision in order to keep up with the biggest names.
Trading across the board struggled to keep up with industry expectations and barely hit a 12-13 per cent return on equity in Q1 2015, whilst negative interest rates also took their toll on returns. However, foreign exchange – one of the biggest money-makers for banks – is now said to be ripe for investment.
Automation is one of the key areas of improvement in this area, with just one aspect being the introduction of electronic and machine-driven trading, which now accounts for 90 per cent of business, uk.reuters.com reports.
This has come as a result of staff numbers being cut drastically, following two years of chaos which saw 38 of the most experienced traders suspended. Most foreign exchange banks had to rewrite their business plans for 2015 when an unexpected surge in the Swiss franc sent shockwaves through the markets in January. Deutsche Bank and Citigroup were just two that suffered big hit, wsj.com notes.
Peter Jerrom, ex-head of global options trading for Unicredit and now running a derivatives business for London brokerage Sigma, said: “What the franc trade said to me is that they haven’t got it right and you need to put more money into automation.”
Automation isn’t completely taking over, though. After the Swiss central bank lifted its cap on the franc, many clients were asking banks for more personal supervision of their positions. The most in demand, according to recruiters, are compliance and regulatory officers, mathematicians and programmers.