Technology has revolutionised modern society. You name it and technology has made an impact. The same, of course, can be said of the foreign exchange (forex) industry – particularly in regards to automation, artificial technology, blockchain and more.
Automation, in particular, is a dominant presence – not just in the forex industry, but in the wider job market. With robots replacing workers and the value of certain trades and skills becoming less and less needed, it is changing the global market as we know it.
So how is this relevant to the forex industry? Well, it appears that automation is going to change the structure of brokerages. It may even be the death of some departments and professions within the forex industry.
The structure of brokerages
The structure of brokerages depends on the broker. The aim of the broker has a large impact on its set up. However, there are certain departments that are consistent across pretty much all brokers.
Generally, a broker will have a compliance department and, depending on the size, a separate legal department. Like many companies, there will be an accounting and finance team, IT and engineering, customer support, human resources and, of course, the sales department.
Boston Technologies, a provider of software and trading platforms to institutional and retail FX and CFD brokerage firms, provided the below as a general outline of how a mid-sized broker is structured. The company deliberately excluded a development team, as the structure assumes the broker outsources this department.
Some of the more recent departments that are becoming consistent across brokerages is a marketing and/or communications department. In recent years, there has been a notable uptick in the number of marketing and communication roles. Particularly those with a focus on SEO, social media and content. This is, of course, the direct result of the growing importance of social media and online marketing in our society.
Another department to grow in popularity is the retention department. This department solely focuses on keeping clients of the firm and is separate from the sales team, as their priority is more on relationship maintenance then to attract new clients.
Whilst some departments are growing in their importance the structure is more or less the same as it was five years ago.
What does automation mean for ?
It means a lot of things. Automation is changing the industry, from fast and accurate executions of trades, quick transactions and instant identify verification. Large investment banks such as JPMorgan, the largest FX dealer by global volume, are making big steps in automation. This year, news broke that JP Morgan was developing an AI robot. This will execute trades in place of human traders.
Is it time to say goodbye to dealing desks?
One thing that does look certain, however, is the eradication of dealing desks. Brokers across Europe are now investing more time and resources to have these processes automated, saving them time and money in the long run.
Specifically, Vlassi states: “We will see possibly the extinction of the dealing desk within the following years, there will be an automated procedure. It will be covered from the systems, the dealer.”
However, Vlassi points out that dealing desks will still remain part of large investment banks for a while. This is because these financial institutions are slower to change their systems. So what does this mean for professionals about to start their career in the forex industry? Well, perhaps it’s not the best decision to go into dealing.