Reeling from the long-running benchmark manipulation scandal and resulting fines, and an extended period of low volatility followed by the ructions caused by the Swiss National Bank (SNB) in January, most FX business heads struggle to recall a more challenging period.
“I’ve worked in FX for 25 years and experienced many cyclical ups and downs, but these were all unprecedented shocks to the industry concentrated in a short period of time – from the original allegations of collusion in 2013 to a massive uncorrelated drop in volatility and then the chaos unleashed by the SNB,” says one industry veteran.
This unique string of challenges has transformed an industry in which banks had always competed fiercely for market share, but were also known to be chatty and collegiate, sharing information where necessary and working together to address common areas of concern.
With the revelation that information sharing had morphed into collusion and manipulation of client orders in some corners of the industry, conversation has evaporated from many trading floors, with staff often unsure of what they can and can’t say to their colleagues, clients and competitors.