Chat, Instant Messaging, Blogs and Trading
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11 November 2013Joséphine de Chazournes
This morning I read an article in my favorite financial (serious) paper about how the FX price manipulation scandal that is unfolding may make banks ban traders from using trading chat rooms. And that some were looking at ways to replace these trader conversations to bilateral phone conversations. I did check and today is not April fool's day. Maybe I am out of my mind, could be, please do let me know if so, this is a blog, not a serious article. But in the meantime, please let me try to provide you with a little trading perspective here. Electronification is THE secular trend that trading is going through, I don't see who and how one could stop this. Seriously, even when I write about fixed income trading, notably the most voice-traded assets in financial services, I have to write about electronification. Ok I did work for an exchange once upon a time, but I also did work for a notable dealer known for making heaps of money on voice trades. But even outside of trading, my retail banking colleagues keep writing about electronic transactions, handheld, cloud and the likes. And outside of finance, well guess who uses the internet to chat, talk, socialize, buy consumer goods, nearly everyone we all know. What would you say about banning teenagers from using facebook because they could meet dangerous people on it or expose their personal lifes unnecessarily? Sounds like a just cause but you can't, facebook is here to stay, like linkedin is here to stay for us analysts, and like electronic chat groups for traders. A trader's job is to make the best price for his bank/broker on an asset and reap a profit from it by buying and selling these assets. To make the best price for his banks he needs as much (relevant) information he can have to make his own mind/models like I need to read what my competitors and clients think to make my opinion on something, and so do traders. If you remove such multi-dealer chat rooms as Bloomberg's, there will always be other chat rooms popping up like mushrooms, only this time they will be less legal than the ones traders use now, and they will really cause insider trading concerns. At least when a chat takes place on Bloomberg, the surveillance department of each trader's bank could have access to the message exchange via Bloomberg and Orange's Vault services. Etrali is another important player working with Bloomberg and Google Glass could well become a way to capture traders' voice, chat, instant messages, etc. and put into the Vault too. This way the surveillance department can also look via key words in those message exchanges live, as they happen. Last time I asked a telco service provider if he was able to provide a reliable search facility through conversations taking place on the turrets (phones of the traders), they told me they could not because traders use strange words nobody outside of a trading floor understands and that conversations take place in an awkward sequence: 2 sec with someone and then 1min with someone else and then back to the first one, etc. But with a chat messages exchange then you see the historical trail visually, and yes, they surely use strange words but with time surely one can build a "trader dictionary" to translate these conversations in Oxford's English and it surely would be easier to read the word written by the trader rather than having to read its transcript done by a none-trader inside a conversation with loud shouts from a trading floor in the background. Ok, I have waited a few hours before posting this to check with my editorial board if I was out of my mind, and they say they agree with me: next time a bank tries to make amends via such a press release, wait a few hours to give them such an outrageous headline please.