THETRADETECHFX DAILY from the floor
“ It has proven invaluable to have senior trading specialists in our team who are able to switch in volatile market phases to high touch very quickly .”
have a back-up in place . Improving market access is also an important and ongoing issue on the buy-side , new internal and external specifications , as well as scarce IT resources , can be an obstacle here in the desired flexibility . For this reason , we have also initiated an adjustment of the system architecture with the establishment of the multi asset trading desk . This will allow us to be more flexible in connecting relevant trading venues and information systems in the future , despite the higher hurdles ( IT , interfaces , compliance gates ). In addition , I see a great advantage in our set-up - to have one system or cockpit - with which all multiasset traders have the same information available and easy access to all asset markets . This makes automation and low-touch trading easier to scale and leaves sufficient space for the significant amount of hightouch trades we have to carry out deriving from our core business .
How has automation developed in FX , for example in NDFs ? For G10 currencies - FX spot , forwards and swaps - we trade almost exclusively electronically via the trading platforms - the use of algos is well established and has proven itself in various market phases . Rulebased trading is an option for small volumes , depending on the cross . On the NDF side , we still trade a much larger portion via voice . But we also see the benefits of using algo in NDFs - however , the ability to tap internal liquidity or flows in NDFs is lower compared to G10 spot trading . Algo development in this area is still ongoing but has improved significantly over the past year .
Being able to efficiently trade even broken data is a significant advantage . Other obstacles such as contractual requirements , confirmations and determination procedures are well established on our side . We are also very well prepared for Phase 6 in UMR . Looking at the efforts made here , I assume that participants with lower trading volumes probably do not place the highest priority on electronification of NDFs . Generally , when talking about automation - aside from the major currencies - the liquidity landscape needs to be very well understood and kept in mind . It can dry up all of a sudden , making a fixed ticket amount approach for fully automated trading far too large . We have started to look at how we can improve our trading rules using machine learning to make sure that the system takes different factors into account and does not trade a position automatically that is too big .
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