It is most certainly apparent among large global firms that the prolonged downturn in FX volumes across so many markets has caused many drastic decisions to be made in their respective boardrooms.
The banking sector has considered reducing its headcount by substantial numbers, with Barclays suggesting that it had considered culling some 19,000 staff with a large proportion being from its trading desks and institutional investment management business.
Late last week, privately owned brokerage house Marex Spectron put an end to its FX operations altogether.
Marex Spectron is a large, multi-asset brokerage which lays claim to being the one of largest privately owned firms of its type globally, and has continually found difficulties in justifying viability for its FX business.
The firm entered the FX sector a decade ago, however the decision to focus on its traditional business, which is largely comprised of commodities, was taken as a result of the firm’s FX business having experienced difficulties generating profit, the constantly evolving market place which has caused many brokerages to incur tremendous costs in adhering to new structural requirements, and of course the prolonged period of reduced activity across the entire FX industry.
The only remaining FX product which Marex Spectron will continue to offer is FX hedging which it will offer to its commodities clients.
Marex Spectron’s FX business employs six people, and as yet it is not known as to whether they will be redeployed within the firm or whether they will face redundancies.
Just over two months ago, Marex Spectron hired Kyte Group Head of Trading Chris Harland, who had spent several years of his career with large banks as an FX trader, including Merrill Lynch, CIBC and RBC Capital Markets just at the time that the firm established a working capital facility with Lloyds Bank PLC which set in place a facility of $25 million.
Indeed, as recently observed by LeapRate, companies in the electronic trading business are noting that the antidote to periods of low volume are not necessarily the most prudent times at which to invest resources into attempting to remedy the situation, as it is often a matter of most firms experiencing the same doldrums at the same time, therefore not necessarily the fault of a specific business model, nor can it always be remedied by adopting new practices.