traditional trading floors disappear. This has seen the emergence of new types of traders. Huge trading arcades have developed across the world where banks of individual traders sit busy day-trading. From Beijing to Mumbai. From Warsaw to Gibraltar. Communication speed is critical for the ‘high-frequency’ and Algorithmic traders where orders are generated and entered automatically into the markets. Indeed, some companies have gone to extraordinary lengths to make sure their orders arrive from their computer to the exchange’s server faster than anyone else’s orders (the book ‘Flash Boys’ by Michael Lewis explains all). Needless to say, these traders need immediate news on which their computers will act. Some of these trading systems are set up to respond to headline news. Publish the words: Sugar, Production, Drop and Brazil and it is likely prices will slip, if only momentarily.
The proliferation of ways to communicate has, inevitably, meant that nothing is edited, nothing verified. The phrase ‘False News’ and the more sinister ‘Fake news’ have been banded around a lot recently. Indeed, somewhat illogically ‘Fake News’ was named word of the year for 2017 by Collins dictionary’s lexicographers. Apparently, the use of the term had increased 365 per cent since 2016. Much chatter and news emanating from social media is incorrect either by mistake or design. This makes for some interesting moves on the markets occasionally.
The speed and variety of communication nowadays would have been inconceivable a generation ago. The jury is, probably, still out as to whether the world needs this proliferation of communication mediums. Many would argue the trading world is only marginally
15 | ADMISI - The Ghost In The Machine | November/December 2017
a better place, some would vehemently disagree it is better. Trading commodity derivative markets are larger, faster, and occasionally very volatile and scary. A stop-loss order on the floor was, generally, limited due to human speed. On an electronic platform a stop can be executed in a split-second with the possibility of a large price move accompanying it. A trading error can be catastrophic on a screen whereas it was often containable on the floor.
As a broker, we receive orders mainly by Instant Messenger and e-mail. The use of the telephone is becoming rarer. IM has advantages. You can have a discussion with several clients at the same time. Any orders are written which is useful when English is not the client’s first language. Very quick to refer back to a conversation earlier in the day and its cheap!
Communication will surely evolve further over the next decade. How it does remains to be seen. One thing is for certain it will not involve any postcards.
Howard Jenkins E:
howard.jenkins@
admisi.com T: +44(0) 20 7716 8598
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