Chatrooms and flow data disappear.
Katie Martin at the FT details the changes in culture in the FX industry since news about traders colluding to push fixings in order to profit for themselves. It culminated with $5.3 billion in fines this week.
"I suppose that given the severity of what has occurred, it is unsurprising that banks have gone from the sublime to the ridiculous," said Paul Chappell, founder of currency fund-management firm C-View. For many years, banks happily let their clients know what kind of flows were moving around the market. The unspoken rule: no names, but lots of impish code names, and enough information to help form a good guess.
"Banks no longer give us any colour, for fear of misinterpretation," said Mr Chappell, who oversees about $100m.
"They have clammed right up," agreed Ken Veksler, a director at small asset-management firm Accumen Management. "There's just no point asking for any colour, no matter how vague. All you get is a line from research or the house view."
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The wink-and-nod culture has evaporated. Traders once made it clear to each other which clients were active in the market on a particular day using childish code names. "Dog buys euros" was a reference to the Bank of Korea. "Palindrome" referred to funds run by George Soros. "Geneva boys" referred to hedge fund Brevan Howard. Punctuation marks designed to look like chop sticks "\ /" pointed to the People's Bank of China. And so on.
"That's all stopped. It's all gone," said one trader at a European bank, who did not wish to be named.
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"It's to the point that funds are telling banks if they talk too much. If I am in a chat, with 50 other people, and two of them discuss dodgy stuff, then I am liable. Not as much as them, but [if anything happens] the regulators will hunt me down," he said. "So screw that."
I'm not going to say if it's good or bad. It simply is what it is and traders and markets will adapt.