Not long ago, all trading was conducted over the phone between clients and their sales dealer at their bank. The advent of electronic trading has led to the decline, but not the end, of voice trading. However, many fear that the demands for greater transparency and data capture under MiFID II will finish the job. MiFID II requires banks to record and report data not only for completed trades, but also for trades that they only quoted but never executed. This is a major change from current regime where clients pick up the phone, request a price and then if nothing is done, they can simply hang up without documenting the conversation.
The challenge facing banks today is that, despite regulatory pressures to push more currency trading on venue, customers still pick up the phone to discuss the best prices and market conditions, or to access liquidity for complex trades. This was supported in a report earlier this year by Greenwich Associates, which stated that voice communications will play a key role in the electronic trading era. Given this, how can banks undergo a seamless shift from how they carry out voice trading today to comply with MiFID II without any disruption to their business? Continue reading Can currency trading still find its voice post-MiFID II?