Seventy one per cent of buy-side heads of trading and FX regard automation as their biggest priority, followed by 49 per cent who cite finding alternative methods to source liquidity as their prime concern.
That’s according to the finding of a poll carried out by WBR ahead of the TradeTech FC event in Barcelona, which also reveals that 2 per cent of respondents have automated more than 76 per cent of their trading flow, while a majority of 59 per cent have automated between 26 per cent-50 per cent of FX trading flow.
The study also finds 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.
Simon Wilson-Taylor (pictured), Head of EBS institutional at NEX, says: “MiFID II is by no means the only driving force behind the ever-increasing demand for more automation. Asset owner oversight and new levels of regulatory scrutiny, notably from the FCA who are increasingly auditing the processes and practices of asset managers, have become key drivers for change.
“The FCA Conduct-Of-Business (COBS) requirements pre-date MiFID II, but MiFID definitely raises the ante. Asset managers have been censured and fined, which marks a new direction after several years of attention focused on Bank and Custodian practices in FX.
“Without question, this has sharpened the minds of asset managers now moving quickly to lock-down their FX workflow processes in a fully compliant manner. These trends are not limited to FCA-regulated firms, as we are seeing similar drivers in every market around the globe, which is probably due to the global nature of the larger asset management businesses.
“The issue for many asset managers is that FX has shifted from a historically ‘accounting and settlement-related’ once a day trading activity, to a world of real-time intra-day FX risk management, with new and explicit requirements to justify every step of the FX execution lifecycle. Even the most basic data-centric requirements simply cannot be met on their decades old legacy FX execution platforms.
“Crafting highly tuned FX workflows for hi-touch, low-touch, and increasingly NO-touch execution processes requires a complete change of systems and approach. Hence why every asset management firm is reviewing their platforms and processes and the majority will be implementing a new platform within the next year of so.”
