Recently, Bloomberg reported a 42% surge in deals brokered over IM channels, up from just a quarter in volume for Treasury trading. This comes with the news that much of Wall Street is switching off their robots and picking up the phones to get deals done. However, in some Markets, IM has been the dominant trading platform for some time.
In this blog we are asking, why is WhatsApp so popular for trading?
It seems in times of crisis, traders prefer to put the robots aside. But communications channels such as voice and IM have been prominent for some time as trading tools and have many other benefits in everyday trading.
IM is the de-facto channel for Inter-dealer brokers
The Inter-Dealer Broker community have been using instant messaging tools for nearly a decade.
The commodities market is a very liquid market and demands conversations to gain market colour. Commodities is also inherently global due to the nature of the products they are trading; products like Oil, Gas and Raw Metals are traded across country borders and time-zones so the best way to contact each other is via Instant Messaging.
People reply quicker to IM than an email and it’s less intrusive than a phone call.
Adios Yahoo Messenger, Hello WhatsApp
IM as a trading channel has always been prevalent in the broking community. Their customers would contact them via Yahoo Messenger, which used to be the dominant platform for instant messaging. But when Yahoo shut down their messenger platform in 2016, customers started adopting WhatsApp as it’s replacement as it was free and easy to use.
Customers were using WhatsApp to trade
The choice to deal over IM wasn’t made by the Brokers, it was made by their customers. Broker dealers knew they had to protect this revenue stream and ensure its use was compliant with current regulation.
When MiFID II was brought in, firms had to record their communications data, so Brokers showed their compliance by prioritising WhatsApp as the largest proportion of their business was arriving through that channel.
In fact, in today’s market we have found that over 95% of OTC Trading is performed over WhatsApp. That’s huge!
So, why is trading on WhatsApp trending?
The benefits of Trading on WhatsApp
Let’s face it, everyone loves being more mobile. You have more flexibility, quicker response times and you can work anywhere, anytime. There are many benefits of using WhatsApp but here are just a few:
- Wider range of revenue channels
In a landscape which is heavily regulated, employees need to find more ways to serve their clients and stay competitive. Branching out into new revenue streams is one of the many ways to achieve this and channels like WhatsApp and WeChat are cost effective ways to stay agile and respond to market demand – keeping costs low and revenue high.
- WhatsApp supports remote working policies
We live in a world where remote working is now the norm so if your company isn’t allowing flexible working, then you risk getting left behind. Enabling your workforce to trade over WhatsApp means they can trade whenever they need to, wherever they need to and get it done safely, following their regulatory obligations.
- Improved customer service on the channels they use daily
Clients expect you to be there when they call. It’s that simple. Your employees know they have to answer client calls or messages, on whichever channel they are using. It makes business sense.
Some firms resort to firing their employees for using WhatsApp but this is not the way to support your employees to trade safely and compliantly. A blanket ban or company policy banning WhatsApp use is not only futile in today’s market but counterproductive.
If your clients are using WhatsApp, then so should you. Ban by policy is not an effective way to mitigate the risk of non-compliance if that channel can be captured and monitored in a compliant way. But how can you enable these channels in a safe and compliant way?
Read on to find out.
How to achieve WhatsApp compliance
From a surveillance perspective, firms still need to prove that they are monitoring and supervising all the business-related communications, be it on WhatsApp or conventional email. They must ensure that their employees are adhering to regulatory requirements, as well as offering ‘suitable and appropriate advice’.
While this can take the form of archiving electronic communications such as WhatsApp, an archive-only approach is still very much a reactive response to the wider problem of effective supervision and compliance.
At VoxSmart, we not only provide industry-leading mobile recording technology, but we can now deliver the capacity to monitor all communications, to ensure your employees are observing ‘best practice’ and your clients are receiving unrivalled service.