Banks cornered after London fixing investigations shrink FX trader talent pool

In the meantime UBS is seeking lenience in FX manipulation investigation (again)

Recent weeks will most certainly remain in history for most professional FX traders, as the number of suspended/fired traders has been ever growing and the FX manipulation investigation is on the minds of worldwide regulators. There is one more angle that hasn’t been touched yet and it is an important one – the pool of talent has suddenly become quite shallow for the banks as they fear to hire traders who might have something to do with the investigation.

While we have already reported that electronic dealing is largely substituting the bulk of forex traders at major banks, the income from their clients could dwindle if they don’t manage to find suitable replacements. Proprietary trading desks have been disappearing due to new regulations, however the number of people involved in FX banking and at the same time not involved in FX fixing manipulation could be surprisingly low.

While operational issues might be affecting banks this could result in more business being moved to different providers of institutional services. We expect volumes at major brokerages to take a leap higher as a consequence of the FX rate rigging investigation.

In the meantime banks will struggle to fill the gaps left by their fellow traders as electronic dealing has certain perks and so do certain customers. According to a Reuters report the number of City FX dealers according to recruiters is between 120 and 125 for about 25 banks. That leaves the professional FX dealing jobs market quite scarce in talent when 21 of them are already gone.

In the mean time according to a report by Bloomberg that cites internal sources UBS is once again seeking immunity in exchange for through information about the banks practices related to FX fixings. The company has already saved itself billions in fines after it’s involvement in last year’s Libor fixing scandal has been largely forgiven by regulators worldwide.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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