January 23, 2018 / 7:13 AM / 8 months ago

RPT-Mobile FX trading taking off even with banks' reticence - survey

(Repeats Monday’s story with no changes)

By Saikat Chatterjee

LONDON, Jan 22 (Reuters) - Increasing numbers of traders are using their smartphones to conduct foreign exchange deals, a JP Morgan survey showed on Monday.

In the second annual edition of an online survey among 400 institutional traders — a ,majority of them focused on foreign exchange markets — JP Morgan found the proportion of investors now using a mobile trading app jumped by about 20 percentage points to about 37 percent.

Significant barriers remain, in particular, with relation to company policies preventing trading on mobile devices.

But Scott Wacker, global head of e-commerce sales and marketing at the U.S.-based bank, said electronic trading will continue to grow “whether as a result of external regulatory push or an internal drive for efficiency.

“As the market becomes increasingly comfortable with the security protocols with mobile trading technology, we expect that electronic trading and interaction with the financial markets over mobile devices to increase,” Wacker told Reuters.

The survey also found that the average proportion of notional trading volumes that will go through electronic channels rising to 74 percent in 2018 from 68 percent last year.

While currency markets are far further ahead than their fixed income counterparts in terms of proportion of trading that goes through e-channels, traders say there is a fair amount of volumes on currency swaps and options that have yet to migrate electronically.

The survey also found that market structure and regulatory changes were the biggest source of concern for currency traders with about 37 percent of those surveyed citing that as the major issue facing them followed by geopolitical events and global economic uncertainty at 27 percent and 25 percent respectively.

A Bank of International Settlements report in September 2016 showed global currency trading fell to a daily average of $5.1 trillion in April 2016, a 5.5 percent from the $5.4 trillion average three years ago and the first broad contraction of the market since 2001.

Increasingly, a larger chunk of the volumes in currency markets takes place in swaps and other derivatives rather than cash markets.

Trading via algorithms is expected to see a significant jump this year compared to click to trade, which is where investors respond to streaming prices from banks or the RFQ approach where investors request prices from various liquidity providers.

Keeping in line with a general pick up in currency and bond market volatility over the opening weeks of the year, large banks as well as multi-dealer platforms have reported a pick up in trading flow.

In the first five days of trading under the second version of the Markets in Financial Instruments Directive (MiFID II), Tradeweb’s multi-dealer platform said European credit market volumes surged 70 percent over the daily average in 2017.

JP Morgan took the top spot among foreign exchange dealers, according to a survey published last year by Greenwich Associates followed by Citigroup, UBS and Deutsche Bank. (Reporting by Saikat Chatterjee Editing by Jeremy Gaunt)

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