Currency traders facing extinction

A widening probe of the foreign-exchange market is riling an industry already under pressure to reduce costs as computer platforms displace human traders.

Electronic dealing, which accounted for 66 per cent of all currency transactions in 2001, will increase to 76 per cent within five years, according to Aite Group, a Boston-based consulting firm that reviewed Bank for International Settlements data.

About 81 per cent of spot trading - the buying and selling of currency for immediate delivery - will be electronic by 2018, Aite said.

"Foreign-exchange traders are much like stock floor traders: a rapidly dying breed," said Charles Geisst, a finance professor at Manhattan College in Riverdale, New York.

“Once the banks realize they are costing them money, the positions will dwindle quickly.”

At least a dozen regulators are investigating allegations that traders colluded to rig benchmarks in the $5.3 trillion-a-day currency market.

That scrutiny may give banks an opportunity to cull more staff, say analysts including Christopher Wheeler of Mediobanca in London.

It’s also boosting demand from clients for greater transparency in pricing and transaction charges, accelerating a longer-term shift in trading onto electronic platforms.

Bloomberg