DislikedHi institutional traders, any thoughts on how the changes below will affect FX markets going forward?Ignored
11 tech trends that will shape your finance career in 2015
Swiss currency automation move may reshape trading
I've read the FINMA decision twice. Have also read the article you quoted from and additional reporting on the matter.
In the FINMA case, I don't think "automate foreign exchange trading" means what everyone thinks it means.
In the 3rd article I listed, the reporter seems to be confusing 3 seemingly-related-but-actually-quite-separate issues: "automated trading", "price fixing fraud", and "algo trading".
Consider the following points:
1. From the FINMA ruling, it seems only UBS was slapped with the "only 95% automated" restriction. And remember, I don't think "automated" means what y'all think it means.
2. If it really does mean what y'all think it means i.e. REALLY automate the business of trading from A to Z similarly to the Algos, it doesn't solve the problem it purportedly is trying to circumvent, which is "forex manipulation". If at all, it may even increase the risk from forex manipulation, not reduce.
3. What I firmly believe FINMA's meaning to be: 95% of UBS's trading should be via electronic platforms (like EBS) instead of via interdealer brokers (i.e. human "voice brokers")
My definitions:
"automated trading": Certain processes are automated, key among which is "price discovery" which should be more economical when handled on common electronic platforms instead of via human brokers.
"price fixing fraud": unrelated stuff your mother's been reading about in the papers. Google-able.
"algo trading": more unrelated stuff your mother might be reading about in the press. Google-able.
My own thoughts as to how FINMA's decision will affect markets going forward? I'm guessing "nothing much", but that's just my 2 cents. But for sure, if this turns out to be a trend globally, there will be more out-of-work interdealer brokers because of this.
Bank traders are losing jobs also, but this would not be the reason.
In any case, a "skilled" human trader does not trade the same way as an automated program, so AFAIC the comparison (if there is one to be made) is not valid. Human traders have their exclusive uses as do algos, I'm sure.
I suspect even the most advanced algo systems require human tweaking from time to time during the life of the programs.
Disclaimer: I don't care if I'm wrong.
I'm not trying to convince anyone. I'm not in the "convincing" business.