FX buy-siders look to reduce human touch on trading desks

Survey by WBR ahead of TradeTech FX conference finds automation is the biggest priority for buy-side FX trading desks.

Senior foreign exchange (FX) asset management participants consider the reduction of human touch a top priority for trading desks, according to recent survey.

A poll of buy-side heads of trading and FX, conducted by WBR ahead of TradeTech FX in Barcelona this September, found that a majority of 71% agreed that automation is the biggest priority, followed by 49% who answered ‘finding alternative methods to source liquidity’.

Those surveyed stated that better pricing and execution, reduced trading costs and improved controls of the trading desk are significant benefits to reducing the human touch and increasing automation.

“I agree that reducing human touch on the FX desk should be the top priority here. The automation of FX flow will allow for reduced trading costs via investment in scalable technology which can automate human workflow,” said Alex Smyth, head of trading at Florin Court Capital.

“For example, it can allow for faster trading by executing multiple orders simultaneously. It can also result in improved controls via reduction in human error, and allow for greater optimisation by freeing up time spent on ‘button clicking’ to focus on execution review.”

WBR’s survey found that just 2% of respondents have automated more than 76% of their trading flow, while a majority of 59% have automated between 26%-50% of FX trading flow.

Paul Chappell, chief investment officer at C-View, commented that he was surprised by the results and that there isn’t more automation of FX trading flow.

“At C-View, we have had automated trading flow for over 10 years,” he explained. “That being said, the larger clients and asset managers have needed to retain greater control and relied upon execution relationships in order to complete large orders. With the increased use of algorithms, more large flow can become automated.”

Chappell concluded that there is now a stronger indication FX participants are looking to automate more of their flow and processes, and the fact that it is listed as the biggest priority irrespective of potential operational cost highlights how beneficial the buy-side consider it to be.

To read the full report, click here.