Forex Probes Take Toll on Traders, Ranks Thin Out Along with Liquidity

by on April 30, 2014 7:48 pm BST

Forex traders have seen their ranks thin out as a global probe across the industry takes place in regards to market manipulation. Since October, over 30 traders, at various levels, have been fired, suspended or have taken leave across 11 financial institutions. The manipulation black-eye has also taken a toll on those in the industry not associated with firms dealing with alleged misconduct.

Most traders have seen a vast reduction in liquidity in the foreign-exchange markets within the last couple months. For instance on Tuesday from 12PM EST to Wednesday 1AM EST, EURUSD had less than a 15 pip range. Supposedly the most traded pair in the world had less than a 15 pip range for 13 hours.

Brad Bechtel, managing director at Faros Trading LLC, estimates that the largest institutions have between 80 to 160 voice spot rate traders. If over 30 traders are no longer in their former roles, “that’s a considerable percentage of the workforce,” said Bechtel.

Traders are now taking leave due to “personal” reasons. The Royal Bank of Scotland’s head of FX trading, for Europe, Middle East and Africa, James Pearson will take a five-month sabbatical. Kevin Rodgers, global head of FX at Deutsche Bank, will retire in the coming months. His retirement is said not to have been prompted by the probes.

Both institutions have been fined due to several cases of financial malpractice and cured with manipulation wrongdoings.