Global FX Recruitment: How is e-Commerce shaping the future?

Over the past three years, the role of the e-commerce specialist has evolved significantly within the global Foreign Exchange market.

April, 2005

Over the past three years, the role of the e-commerce specialist has evolved significantly within the global Foreign Exchange market. All mainstream and most niche houses that compete in this sector have embraced new technology and now offer clients a range of services distributed through a network of e-commerce channels. In order to examine how e-business is affecting the pattern of Global FX recruitment, we need to identify what major factors have influenced recruitment policy in recent history and subsequently analyse any new trends that can be observed.<br><br>Looking back to the late nineties, the single biggest shift in focus for most banks operating in Global FX was the general reduction of FX risk taking and conversely the development of FX distribution activities. This desire to transact more customer oriented FX business can partly be attributed to a climate of more stringent risk management and compliance control. The main reason however, is that this change occurred at a time when revenue growth from FX Sales had exploded due to the increased appetite of customers for conducting FX derivatives transactions.<br><br>The race had begun for banks to grow client franchises. Recruitment trends at the time reflect this and many salespeople were hired to enhance the banks product capabilities or reach. Inevitably, traditional methods of distribution were supplemented with various e-business tools and from this point the traditional role of the FX Trader and FX Salesperson began to change.<br><br>Current situation<br>Cut back to 2005 and the underlying objectives for many banks remain unchanged with the emphasis still on provision of FX services to the firms client base. What is different today is that few people doubt that vanilla FX execution is on the whole better handled by an e-platform. Indeed, with the increasing sophistication of these systems, more complex transactions can now be similarly handled. Nowadays the e-channel is considered just another route to winning the clients business and as such the e-sceptics have largely disappeared.<br><br>During the intervening period we have witnessed subtle changes of attitude towards e-commerce skills when recruiting FX Traders and Salespeople, with completely new roles available for those willing to focus on e-commerce.<br><br>What then is in demand and why?<br><br>On the trading side of the business, people trading FX derivatives have always been in demand and as the banks strive to sell more structured, tailor made solutions, demand for this type of skill-set has steadily increased in the last five years. Until recently derivatives traders were the exception to the rule as FX Trading went through a period of decline. Many banks pursued a policy of reduced risk taking and cutting back on the number of Traders responsible for market making. <br><br>With the wide-scale application of e-commerce technologies, available liquidity and price transparency to most market participants has increased <br><br>In the last year we have seen much renewed interest from our clients in FX Trading, in particular Proprietary Trading skills are most in demand. This has largely been driven by the leveraged community looking for Fund diversification and seeing the banks as the natural source for appropriate candidates.<br><br>With the wide-scale application of e-commerce technologies, available liquidity and price transparency to most market participants has increased. The role of the traditional FX Salesperson has therefore changed in several ways. Client relationships have become even more important as the client may have been offered the same execution service from five competing banks but will probably choose to execute the business with a most trusted or favourite counterpart. With vanilla FX increasingly commoditized, banks are looking to hire specialists to distribute Emerging Markets products or sell more complex derivatives in order to achieve higher margins. Additionally, e-commerce specialist FX Salespeople are also in demand. These candidates have demonstrated adaptability and the skill to embrace new technologies to enhance profitability. They have been able to move into e-commerce focussed distribution roles despite having more traditional FX Sales backgrounds. These Sales operatives have good client development skills combined with excellent FX product knowledge and are able to empathize with clients who see the world from a trading and not a technology point of view.<br><br>On the whole there is an expectation by most banks when recruiting FX Salespeople that they are able to utilise e-business tools to strengthen client relationships by offering a wider range of services such as the benefits of STP for example. The role of the e-commerce expert has also changed as candidates with additional FX Sales skills are increasingly favoured over those with backgrounds purely in technology.<br><br>It is now not good enough to understand your firms e-business tool; the requirement is also to understand your clients underlying business.<br><br>Over the last year, by far the busiest sector for search specialists in FX globally has been Hedge Fund Sales and Marketing<br><br>Future recruitment<br>Since early 2004, FX recruitment has been very busy, many projects were finally given the go ahead and a number of firms were seen to be growing staff levels within Global FX. Despite a number of redundancies at the start of 2005 as banks adjusted headcount, there has not been a glut of strong candidates in the market. Furthermore, the pack instinct of the Investment Bank community has created several overheated areas where packages continue to rise sharply.<br><br>Over the last year, by far the busiest sector for search specialists in FX globally has been Hedge Fund Sales and Marketing. We estimate that every top 20 bank in the market has sought to increase exposure to this client sector in this period and on average they have hired more than 2 people each.<br><br>This has therefore, left many organizations short of experienced staff providing HF coverage. In order to retain relationships with clients in the HF community, some banks are offering other investor services linked to FX such as providing seed finance or capital allocation. In some cases these banks are exploring opportunities by utilising links with Private Banks or HNW networks.<br><br>The major overseas growth area in FX is likely to be Asia with many firms still viewing China as the next big opportunity. Exotic product skills are still very much in demand in the region as the use of FX derivatives into retail distribution networks is increasingly common. In the US, the greatest demand has been for senior FX Salespeople with strong relationships as banks continue to compete to distribute FX products.<br><br>Summary<br>For many FX market participants the challenge of identifying and hiring the best talent for their firms has become increasingly difficult and expensive. With many of the larger commercial banks challenging the dominance of the US Investment Banks in this field, the trend of more aggressive recruitment practises such as team moves looks set to continue.<br><br>To answer the original question of how e-commerce is shaping the future, it can clearly be demonstrated that it has already impacted the present and now is a major factor for consideration in all modern FX franchises. As technical development and sophistication of e-forex products continues apace, it remains to be seen just how far e-forex will continue to change the underlying FX business.