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Screenshot of a breaking news alert e-mail from Q2 2017
Delphine Strauss of the Financial Times wrote an article discussing dropping revenues of FX trading banks. The FX desks have been double hit, by not only low volatility but also a more conservative approach to trading amongst internal teams and the outside world since the international FX probes regarding the 4pm fix and other issues swept across the globe. The data from the report came from Coalition.
Here is a little summary of her piece, which you can read in full by clicking here.
– The slide in trading of major currencies was big, with revenues down 35% from the first half of 2013 – the biggest year-on-year decline since 2008.
– She believes the fall has been exacerbated by investigations into manipulation of the foreign exchange market, which have prompted many banks to suspend senior traders and accelerate a shift from voice to electronic trading.
– The drop was also accentuated by comparison with a period when the launch of so-called Abenomics in Japan allowed traders to make hefty profits from the yen’s rapid devaluation.
– Shift towards automated trading had added to the costs of technology.
An interesting comment left on the article states: “So, are we to conclude, that while the heat of investigations is on the banks, they cannot engage in nefarious trading practices that have helped their bottom lines? Does one have to cheat to profit?”