SWIFT has served as the backbone of international banking transactions for a long period of time. The company has a major say in the global financial markets and when SWIFT issues a statement on a matter, the forex industry pays close attention.
SWIFT recently published a report where it urged industry players to work together to increase the automation levels in global forex markets. This is to be done by having improved standards for trading.
The SWIFT report focused on the importance of quality standards and pointed out that there are several bottlenecks in the industry. There was a lot of inefficiency in the industry because of manual processes being involved. SWIFT concluded that with better and more automation, the forex industry would experience a burst of development.
SWIFT thinks that better standards will encourage automation to happen. The company acknowledged that the current standards work well with the forex market but the being stagnant will not be good for the market long term.
SWIFT points out that improving performance in the various aspects of the financial industry will be a big challenge. However, you have to start some place and SWIFT has taken some steps to improve their forex performance.
SWIFT Response To FX Market
One notable obstacle that SWIFT points out in the report is trade confirmation via the traditional methods of email, fax and telephone. SWIFT says that an increased volume of trades will overwhelm this particular method of confirmation. High degrees of automation will be able to help, with software helping to approve the multitude of requests. This will make it a necessary part of the forex industry.
In a statement, Juliette Kennel, SWIFT’s Head of Securities and FX Markets said
While there is a high level of automation in FX markets already, the industry cannot be complacent and must work together to remove the remaining barriers to efficient exchange. Increased levels of automation through more use of and better use of standards will unlock higher operational, commercial and financial performance for all participants in the global FX market.
Kennel then pointed out that SWIFT plans to improve current forex market standards. Working with current players in the global forex industry, the company hopes to do three things. First, lower the cost of forex transactions. Next, increase the potential returns on forex investments. Finally, to lower the risk involved with forex. However, SWIFT will also take it to another level by looking to identify the bottlenecks and other challenges in the industry and find ways to overcome them.