Reporting today from the Wall Street Journal, Chiara Albanese collected some insight from the TradeTechFX conference happening in London today. Global regulators ever since the LIBOR and FX rate fixing scandals have been looking to revamp regulations to mitigate any repeat offenses. However, as reported from the Wall Street Journal today, many in the industry see the heavy hand as a top issue, and not necessarily for the better.
In a panel discussion from the conference, Lee Sanders, head of currencies and fixed-income trading at AXA Investment Managers, which oversees EUR694 billion in assets stated: “The regulatory drive is massive, every firm wants to be seen doing the right thing.” This is understandable considering global regulators are on the march to improve transparency within the FX market after the long multi-year Forex rate rigging scandal which costs banks billions in fines.
The theme and bottom line from the piece is that currency trading could become more difficult and expensive industry participants opined at the forex event today. When your dealing in billions of dollars in assets, these costs can really add up and may be likely we see a fall off in volumes if trading becomes overly expensive and difficult due to any stifling regulations.
In a strong action we have already seen implemented, the UK has beefed negating temptation to cheat the system by making it a criminal offense to try for manipulation of key Forex benchmarks. Moreover, as reported on LeapRate, back in April EBS was been tagged by banks to look into developing an automated system for benchmark rates to remove any human folly.
The Wall Street Journal piece also got a quote from Robin Poynder, director at industry consultancy FMR Advisory, who said that the fines haven’t been enough in a speech at the event. He said he expects more investigations to follow. “More personal accountability and more regulation across spot foreign exchange will be needed,” he said. Traders should be able to justify their actions to regulators, he added.
The article went on to note the algorithmic trend in executing large trades which should probably grab more market share from human traders in the years to come, and also mentioned the global set of principles under talks for conducting FX trading. Back in May the Bank for International Settlements (BIS) established a working group in order to install a single global code of conduct for the FX market along with other such global organizations mentioned in the piece.
Click here to check out the Wall Street Journal piece for more details.