Another month over, another round of FX scandals. This month has seen Barclays’ $150 million fine for abusing its last-look policy and the New York Attorney General’s decision to investigate FX spoofing at leading brokerages.
The bad news keeps flowing, reinforcing the worst stereotype of the world’s largest market as a clubby, male-dominated high-stakes playground.
FX has a “clubbish” reputation, admits Alex McDonald, chief executive officer of the Wholesale Markets Brokers’ Association.
Foreign exchange is unique in that it is largely a bilateral, over-the-counter market – it’s a relationship game. Exchange-like platforms exist, such as multi-bank portals like FXall and 360T, but big ticket trades still get worked through the leading dealers.
The cringeworthy details of how traders at major banks colluded to rig FX benchmarks only solidified the clubbish reputation, thanks to tight-knit groups such as The Three Musketeers, One Team, One Dream and The A-Team.
|Jane Foley, Rabobank|
Foley has worked in FX for almost two decades. She initially worked in the asset management industry, analysing fixed-income markets after graduating in economics, before transitioning to FX markets in 1997. She has worked in FX research at Barclays investment bank and at Gain Capital.
“When I first started out, it was usually assumed that I was a secretary or an assistant and certainly not an economist,” she says.
People no longer make that assumption, says Foley, but even though inappropriate jokes and overt sexism are a thing of the past, she believes sexism still exists in other forms.
“Women are always a minority in FX,” she explains. “In every team I’ve worked in, I’ve either been one of a couple or the only one. I would have thought by now those ratios would have altered more than they have.
“While perhaps there are more women in finance overall, it is very clear that women are still a significant minority in FX.”
That much was evident at this year’s TradeTech FX conference, held in London. Only three of the 45 speakers listed on the schedule were women – a measly 7% – and that was just on the first day of the conference.
Are you in the club?
A former trader, who now works in digital transformation of financial services, sums up spot FX over a pint: “Laddish, simplistic, blunt, brutal, male-dominated.”
“Women who come into finance tend to be smart, so why would they want to do that job?” he muses.
Lisa Hinton joined the FX industry immediately after graduating from university, working at Goldman Sachs for seven years until 2007. She now works in recruitment at City search firm Shadowhound, which recruits across global markets, risk, legal and compliance for buy- and sell-side clients.
“I was very interested in macroeconomics, economic news and politics, so foreign exchange seemed the most appropriate choice,” she says. “I started in FX sales straight away – my direct report was a woman and there were quite a few of us.”
Hinton says the ratio of male to female was not evenly matched, but there was still good representation in mid to junior roles such as associates and analysts.
Diversity on the trading floor is now discussed at senior levels within banks, she adds. As a recruiter into the FX industry, Hinton is asked to show a “diverse range of candidates” for roles.
“There is no good reason why women can’t be traders, but I think the problem historically is that there was a tendency for women at junior levels to get directed to sales,” she says.
Research published earlier this year by trading profiling company Financial Skills found that women can make better traders than men. Their study found that women took less risk, lost less money and were less likely to break trading rules; admirable qualities in a post-financial crisis trading environment.
However, the real issue, as is the case generally in investment banking, is the lack of women in senior management. Motherhood is one factor.
Flexitime in FX
Flexible hours might be the norm for working mothers in other industries, but this is simply not the case in the fast-paced world of FX. Work-life balance at Goldman Sachs was not an issue for Hinton – she didn’t have a family at the time and could commit to the long hours.
“To be honest, I don’t know any woman working flexibly in FX,” she says. “It is hard to have flexible working patterns or job sharing in FX, because clients expect you to know what’s going on in markets.”
Jodi Burns, global head of regulation and post-trade at Thomson Reuters, adopts a more holistic view. She is responsible for shaping Thomson Reuters’ regulatory strategy for its FX business, having joined the company from electronic trading platform FXall when it was bought out.Her attitude is to “hire professionals [and] treat them like grown-ups” – close of business can mean different things for different people.
“As long as the work gets done, I’m less fussy how it gets done,” says Burns. “If someone says ‘I need to be home at 5pm for the kids’, I’ve no problem with that as long as the work is done after the kids have gone to bed.”
She is hopeful that cleaning up the industry’s reputation will attract more young graduates, including women.
“If we don’t have young women joining industry, there are not a lot of female candidates left when it’s time to assign seats at the management table,” says Burns.
The clubbish, relationship-based nature of the industry is changing though, thanks to the adoption of electronic trading. The industry has embraced exchange-like trading platforms with benefits such as a public rulebook to monitor behaviour, and vanilla derivatives can be traded on venues such as the Chicago Mercantile Exchange.
Regulation and reaction to the FX benchmark rigging scandal is accelerating change, including an increased drive to electronic trading, according to the findings of recently published Celent report ‘FX Trading 2.0: Technology and Platforms’, authored by Brad Bailey.
“While spot FX sits slightly outside most regulatory developments, the regulatory impact on FX swaps and options markets is driving change in spot,” he says.
Spot traders who have been let go in the wake of the rigging scandal have simply not been replaced, as humans traders die out.
A smart woman coming into a graduate FX role is more likely to use her intellect in a role such as structuring, says Shadowhound’s Hinton, and there will always be a need for people for relationship management.
Alison Trace, bank relationship manager in FX transaction sales at FXall, believes that while traditional FX traders are still predominantly male, there are more opportunities available for women in e-FX.
“There are a lot more senior roles, and women are becoming a lot more senior,” she says. “This has really changed over the last 25 years.”
Trace has the option to work from home occasionally, and advocates women creating their own clubbiness. To that end, a new networking group called ‘Women in FX’ has been created by women in the industry that are seeking professional development. It has 68 members on LinkedIn, and has been welcomed by market participants.
However, Rabobank’s Foley believes the industry needs to do more to portray a positive image to women, and the time has come for more dramatic change.
“We have got to the stage where an increased uptake of women in FX is not happening by itself so we have to take a more pro-active attitude, whether that be at graduate recruitment level or making the career path easier to follow,” she says.