More Banks Now Move to Automatic FX Trading to Reduce Costs and Scandals

More banks are moving to automatic foreign exchange trading in order to reduce costs and the risk of price manipulation by human employees.

Major lenders such as UBS and Barclays have intensified efforts to fully switch to automatic trading as opposed to the traditional “over-the-phone” human trader after financial regulators launched investigations over whether traders colluded to fix currency and interbank lending rates.

“We already have around 90 per cent of spot foreign exchange going from trade to settlement via automated processes and we expect that to increase,” Antony Jenkins, chief executive of Barclays, which uses the Barx trading platform, spoke to the Financial Times. “There is going to be further and faster automation of much of what is considered investment banking today.”

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Barclay’s rival UBS is also switching to automatic platform over the next three years. UBS conducts around two-thirds of its forex transactions via its Neo trading platform. Overall, the global forex market conducts the $2 trillion spot trading electronically, according to Bank for International Settlements data.

In a separate report London-based forex and derivatives broker Sucden Financial Hong Kong branch announced on Monday that its now allowed to provide its clients with options and futures trading. This is after its type 2 status, which meant it could only work as introducing broker to the holding firm Sucden Financial Limited for options and futures business, was changed by the Securities and Futures Commission in the island city.

Another report showed that exchange and clearing house network provider Intercontinental Exchange signed on Monday a deal with ULLINK to sell to it the NYFIX and Metabit, which are units of NYSE Technologies. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com