I was going to write
something about Brexit one year on and what we have learnt, but I have already
received enough emails stating the obvious about this event so why should I do
the same to you? In brief, I don’t think much has changed – the FX market is still
very good at handling known-unknowns, but – and SNB Day was the real catalyst
for this – it’s perpetually one step away from a meltdown when it comes to
Instead of this –
and prompted by the sad passing of former ACI UK president Alan Attwood last
week – I have been thinking about the people in the FX industry and how they
can help shape the future of the industry.
I had the good
fortune to engage with Alan, mainly through the ACI Australia Dealing
Simulation Course (DSC), and he was, above all else, a consummate gentleman,
always happy to help out and share his experience. The only time I can recall
Alan declining to help was when I asked him if he fancied joining what was – if
I am being honest – a bunch of reprobates (you know who you are!) on the
“professional” broking desk that traditionally sits for the last dealing
session of the UK course. The look on his face said it all – “I’m not sitting
with that lot!”
Instead, Alan spent
the next hour and a quarter walking around the various teams, encouraging,
helping and, importantly in some cases, calming, the youngsters. The point of
this story is that this was clearly where he felt comfortable – helping to
shape the future of the industry.
He was not alone of
course, because on a micro level (and with full disclosure that I help run the
course and Profit & Loss is a
global sponsor) ACI Australia is very fortunate that wherever it runs the DSC
experienced dealers are happy to give up their time, especially in the UK,
Denmark and domestically in Australia.
It is a requirement
of helping out, of course, that the volunteer has sufficient experience to
meaningfully impact on the development of the delegates and this means that
most of our helpers are of a “certain generation” (i.e. old!), but what about
going forward? Are we going to see a new generation of volunteers to help
develop what will then be the latest generation in our industry?
I ask this because a
few developments in our industry make me a little unsure.
Firstly, there is a
real focus on structured development. I totally understand this and there is
undoubtedly a need for it, we must ensure that future generations know exactly
what is expected of them.
A second, slightly
inter-linked, development is the isolationist stance of too many major
institutions. I feel this is, in terms of developing younger talent, short
sighted and detrimental to the industry’s future.
I know some will
argue I am wrong (I’m not!) but there was a cultural problem in the FX industry
that grew around the deployment of more technology. Aside from the minority
deliberately and inappropriately sharing information in chat rooms, most of
what allegedly occurred was institutional – in other words the juniors learnt
it from their seniors on the desk.
To truly reinforce
the internal lessons being handed out now, there is also a need for a broader
community engagement. If you accept – as I do – that the vast majority of
people in the FX industry want to, and do, the right thing, then those coming
up through the ranks should be exposed to more than just their own colleagues.
By doing this we create a positive network effect which reinforces good
A third element is
the recent juniorisation of the industry. Again, I fully accept that
rejuvenation is an essential element of any industry’s evolution but history
suggests we need to be careful about how we go about things.
The last time I
really wrote about juniorisation was in the middle of the first decade of this
century, and what was being discussed was “gap risk”. I had recruitment experts
telling me that we had a generational gap in the industry because the middle
ranks of management had been cleared out by the first stages of
This didn’t seem too
troublesome at the time, rather it was a natural progression, but looking back
with the benefit of hindsight who had to step into the breach left by the tier
cleared out? The exact same generation, members of whom had roles of
responsibility when the whole chat room, collusion and front running scandals
were taking place.
This is not to say
they were corrupt in any way (some may have been, the legal system will decide
that), more it highlights a potential danger in juniorisation and the lack of
channels that allow the entire FX community to help develop standards that can
be handed down through the generations.
To achieve such a
structure now needs people willing to engage and help out everyone – not just
those in their institution. There may not be a commercial advantage, but I
would argue a healthy, well-respected and honest industry means better
commercials for everyone.
We have had an
example of sorts when it comes to demonstrating to younger industry workers the
benefits accruing from the willingness of industry people to give up time and
energy to a broader project in the Global Code of Conduct. This saw a large
number of senior people give up their time to help shape the conduct framework
and help the industry recover, and they are to be applauded for their efforts –
it is exactly the spirit I am talking about.
That said, the
Global Code was the result of a clear wrong needing to be righted, it was
event-drive if you like, and what I am talking about is actually encouraging
the next generation of managers to be proactive in helping maintain industry
This does not dilute
in any way the admirable work undertaken by the FX Working Group, rather it is
to highlight that it can be done. People from different institutions can sit in
a room and do good – it’s not all about dodgy dealings behind closed doors.
I am very happy to
report that the next generation is up to the task, if they they get the right
framework and guidance. Just by looking at the Dealing Simulation Course I am impressed
by the quality and character of the people that attend. We work them hard on
the technical of markets but we also stress the necessity of doing the right
thing – indeed the course is integrating more conduct-related content – and by
and large the delegates fully embrace the need to demonstrate best practice as
part of their development.
Of course it is very
easy to write that the next generation has a responsibility to promote good
practice and give up their time to develop their juniors, but it can only be
done with the help of the current – or senior – generation. The latter has to
be open and engage fully with the next generation if this transformation is to
be successful – and I think we all want it to be a success because it will mean
a less-rules-based future.
So older individuals
can help with this evolution, but most importantly the institutions have to do
their piece. Many institutions are very good about encouraging local community
work, so it would be good if they could loosen the reins and actually allow
people to volunteer for intra-industry work?
I understand they
are nervous of the consequences of further systematic misconduct but they need
to understand that for innovation to continue people need to exchange ideas. It
is hard to see how someone can collude in the market without resorting to
technology so misconduct will be picked up by the institutions, therefore they
should collectively be confident enough to reach out to the broader industry,
including peers. Because after all, an insular organisation is rarely an
innovative organisation, so if the big banks in particular want to be seen as
innovators rather than factories they need to act.
Without an overt
willingness to show how we help shape our own future and (high) conduct
standards the future of FX inevitably lies in more regulation – and that is
something most of us would like to avoid. It is important to note that as
things stand FX has had a very lucky escape and it remains largely unregulated.
If the Code is successful, it will remain so, but there has to be a healthy
element of self help.
This is the spirit
that will help FX thrive and in the spirit of Alan Attwood – and the hundreds
of other volunteers in the industry – let’s ensure that we make it happen.
I am proud to have
been a member of the FX industry for so long and that pride should be reflected
by others because it’s a very important ingredient for (are you listening
institutions?) a successful client service ethos.
There is an
intangible that is not reflected in the bottom line and it is a willingness to
help in our FX community. That said, to reiterate, a well-functioning, well run
and well behaved industry – that also seeks to help itself rather than wait for
others – will inevitably lead to a better bottom line.