TradeTech FX Europe 2023: Workflow automation is non-binary, say experts

The panel discussed automation as a process with various moving parts moving forward, highlighting the importance of considering exactly which resources are expended when it comes to optimising workflows.

Panellists agreed that the various moving parts of the FX workflow when it comes to automation are hard to consolidate, influenced by a range of factors, including cost, size and counterparties.

“When we talk about automation, it’s a process, it’s not a binary thing. One size rarely fits all,” explained Tod Van Name, global head of foreign exchange electronic trading at Bloomberg.

Van Name further highlighted the desire for a seamless aspect to interoperability as firms look at how to handle small orders, which are less sensitive to market movements for example, and return the focus on larger transactions.

When speaking to the most pressing issues regarding workflow automation, the panel addressed various factors. Benjamin Mahe, head of electronic trading and data at AXA Investment Managers, suggested that automation should enable traders to be more efficient and spend as little time as possible on the simplest orders.

Alex Scarsini, president of Edgewater added that giving tier 2 and 3 institutions the same level of access available to tier 1 is also a gap that is looking to be addressed in their universe.

The main focus according to Ed Mount, founder and chief executive of Elysium, is the enhancement of how quickly market opportunity can be taken advantage of, explaining that this is a key area of interest for the buy side. “Understanding business specifics […] and being nimble is key as a provider,” he said.

The panellists also addressed the automation of execution in the space, highlighting the relevance of counterparties and the importance of ensuring they are appropriate when trading FX derivatives.

Mahe asserted: “Platforms need to have the same goals as us,” as Van Name added that the selection of this counterparty should be solved before going out to market.

From a vendor perspective, Mount explained that from where they sit in the post-trade world, which he called less high profile, is where they’re finding that the business success is coming.

“We’ve seen it as a trend in the foreign exchange market that the largest banks are not the largest providers of liquidity, that just kind of happened [and] it has to do to with technology issues at the largest institutions and the inability to adapt quick enough.”

Elsewhere, the panel touched on the reasons why no-touch had not yet happened. Scarsini explained that it is in process and highlighted that at the end of the day, FX market is an OTC and a very fragmented space.

He added: “There’s also the reticence from some of the bigger providers over the last few decades to automate the space […] We’ve seen a lot of brokerage businesses and FX trying to hold onto higher margins and eventually closing shop because the tech does then have an impact and does disrupt the space. Today we keep automating and electronifying the space, there’s no going back.” 

He continued that the market is seeing a strong willingness from participants in terms of moving at speed and embracing the fact that they can automate their workflows and make them more efficient “with the right risk management tools or the right credit modules”.

“Our clients want the tech, but they certainly need more education on it,” he concluded.