For most office workers being forced to work remotely has proven successful. But not for financial traders where communication, technical and compliance issues can make trading from home a nightmare! While casual and individually funded traders have been having a holiday, traders from large corporations have really struggled…
“The mass relocation of a significant fraction of market making . . . has almost no historical precedent in terms of its reach or scale, with the exception of 2001,” said Joshua Younger, an analyst at JPMorgan. “Liquidity overall could also suffer, with some signs of emergent stress . . . in even benchmark Treasuries.”
In New York, one bank kept its trading floor open despite a worker testing positive for COVID-19. Adjusting to working from home has been difficult for many, but it has been a real headache for the 90% of traders who have been relocated. While some traders have been sent home, others are redeployed to back-up sites in satellite towns or put on an office rotation. For the U.S, the coronavirus pandemic is looking to be the greatest physical infrastructure challenge facing traders since 9/11.
Trading floors are set up with announcements, compliance checks and all the tech traders could possibly need to be efficient. The hashtag #ronarigs soared as traders improvised trading setups at home with computers, monitors and remote access all wired to traders’ living rooms. But this hasn’t been the biggest issue, at banks information is synchronised at exactly the same time as the server to avoid delay. At home trading faces the challenge of minute delays that can make the world of difference when a millisecond can cost thousands for scalp traders.
A problem the average Joe may not consider is communication. Working remotely has caused all sorts of communication issues such as organisational fragmentation that can lead to dysfunction and markets can become less and less effective. As a result dramatic volatility in equity and bond prices means liquidity may suffer and an economic crash may be on the horizon. Adding to that is the difficulty of companies to enforce compliance standards when traders are no longer at desks with recorded phone lines and under close supervision. Monitoring market abuse has been particularly challenging at home where traders have more freedom, access to personal devices and the interruption of family members in earshot of sensitive information. All of which are completely against compliance regulations.
So what are organisations doing to monitor compliance?
Firms can carry out a work station assessment to judge the privacy of their trading, including details of cohabitees, such as name and company. Firms have also been introducing innovative technologies to monitor trading sessions, including audio visual monitoring and door opening detection. IS this sacrifice of personal privacy for company privacy something you agree with?
Some firms are switching more to automation to regulate orders and reduce human interaction. Not only does these AI technologies improve efficiency but mean companies are less reliant on human communication and possible errors. Although this transgression to financial technology has been growing, COVID-19 has boosted the use of AI and other technologies more than anyone could’ve predicted. Despite this being a huge advancement for trading organisations it puts workers livelihoods at risk at a time of great uncertainty.
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