
Currency Traders Are Left Out of New Wall Street - T-A
http://www.bloomberg.com/news/articles/2016-02-08/a-dying-breed-currency-traders-are-left-out-of-new-wall-street
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ryporter
I used to work for a forex hedge fund, so I witnessed some of this trend
(though primarily via my boss who had regular conversations with many banks).
This trend is very real. Underlying it is the continual shift towards
automation, but it was greatly amplified by both the financial crisis and then
the forex scandals. We interacted with many former forex traders who had
transitioned to a sales or support role. We also at times had trouble getting
anything done with banks because everyone was seemingly fired or on leave due
a scandal.

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abcampbell
y, it's an interesting trend.

Decision making processes evolving to machines talking to machines, and humans
talking to humans.

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Sniffnoy
This article doesn't seem to address the question -- why _currency_ traders,
specifically?

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rluhar
TLDR: FX is getting to where equities and derivative markets have been for a
while

FX is an OTC market. There are no official "exchanges". Most trading happens
either on the interbank markets or via brokers like ICAP, BGC, etc.

Over the last few years, the spreads (difference between a buy and sell price)
have compressed. FX Clients (i.e. corporations, hedge funds etc.) who would
trade directly with their preferred banks; now aggregate feeds from multiple
banks and brokers to attempt to get the best possible price.

This automation and increase in client sophistication has led directly to
tailored market making and sophisticated risk management. The number of
players in the FX market has increased as the technology has commoditised.
Things like the latency and quality of your market making feed have become
differentiators.

All of the above has resulted in the market going electronic and a massive
reduction in the proportion of trades being quoted and managed by human
traders. In most banks, market making is now done by algorithms that aggregate
market data and other information from a variety of sources.

Traders have either become specialised to niche currencies (Asian, Emerging
Markets, etc.) or at dealing with extremely large trades. Their job is now all
about determining the type of rate (i.e. which algo) a client should get and
how the risk from those trades is managed (aggressively, passively, etc.).

I have worked on FX desks (as a developer) for 10+ years. I have seen spot
trading desks shrink incredibly, with old school traders being replaced by
quants and quant-developers. The algorithmic trading space in FX is not as
sophisticated as that in equities of derivatives, but is getting there.

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osullivj
Cash FX (spot, forward, simple swaps, cross rates) is almost totally
automated. FX options is less automated. Since FX is less capital intensive
than rates or credit, there's still a fair bit of old fashioned trading
activity there, even among banks that have withdrawn from other FICC & equity
areas like UBS.

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rluhar
Depends on which bank you are talking about :)

You will be surprised at how many places still have spot traders quoting 500K
EURUSD rates and assistants running around with pieces of paper..

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phyalow
500k flow ccy spot via voice? I think you are joking. It's easier for a client
and a bank just to trade via an electronic platform. The voice trader would
likely direct the client to his on screen rates and he would trade there. I
suggest anything under 15mn would be traded via screen.

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osullivj
Last time I was on an FX trading floor (2010) clients seeking voice quotes for
spot would get a sales person who would be using the sales version of the FX
single dealer platform. Sales guy would voice quote the electronic rate made
by the auto trading system that was shown in the Java SDP GUI on their
desktop. For top clients the spread might be tightened slightly, but most
would get the vanilla electronic rate. No human trader would be involved, and
there would be no manual price discretion at any point.

