Paul Orford is Head of Institutional Sales at Inflyx
On my recent sabbatical, like most people might, I questioned the meaning of life and my contribution to the well being of our civilisation. By asking myself the big questions and trying to find out what this life is all about, I could have used conventional methods such as finding a religion that fitted nicely into my 21st-century consumerist needs or a painful and strange form of yoga which no doubt would involve me wearing some form of brightly coloured active wear. Instead I self-medicated on large doses of the Internet which entailed getting stuck in the YouTube vortex of nonsense.
My daily diet consisted of watching dogs walk on two legs, people falling over in odd, peculiar and fascinating ways and finally the last bastion of the terminally bored on the internet… conspiracy theories.
After about two minutes of watching these, I concluded that the Internet can sometimes give validity to people with some quite serious psychiatric challenges. After I took off my tin foil hat, I stumbled across a video regarding an experiment being conducted in China known as ‘Social Credit’.
For those who are not aware of this, it’s a programme that currently has opt-in status. It has essentially gamified society (whatever happened to the gamifying of forex craze?) with you being rewarded for being a good citizen. It has four core values on a personal level which are payment of invoices, ability to honour contracts, personal preferences and behaviour and interpersonal relationships.
The better you are as a citizen, the more points you score, giving you access to the finer things in life such as access to better credit, flights and better hotels. It is argued that if someone’s score drops below a certain threshold, their movements could be limited or perhaps they might face challenges getting their child into the school of their choice.
By this stage of reading the article you are maybe wondering ‘what’s this got to do with forex?’ Possibly quite a lot: the Social Credit programme is also being rolled out to businesses with the goal of a self-enforcing regulatory regime run on big data.
Having witnessed the free-for-all of little or badly performing regulation in forex and binary options over the last 15 years, we then saw the Chinese market being taken advantage of. Some providers plundered this market, culminating in mass demonstrations being held at local expos along with arrests and convictions.
With this new programme in place, could it lead eventually to the cleaning up of the Chinese industry and give a more positive impression of electronic trading?
My logic to this is that if a broker is treats people badly (which will be dictated by big data), it won’t be just the employees and owners of the company who face challenges in their future business and liberty. Service providers (both shareholders and employees) who offer a service to the broker will lose points as well, meaning possibly slower internet speeds or a reduction in viable banking facilities amongst other challenges that are detrimental to running a business.
Although there are undoubtedly huge questions about this programme in terms of its impact on individual liberty, in our area we were all essentially given the freedom to create an industry based on trust and transparency. With the actions of the few blowing it up for the majority of us, new laws and reporting procedures are now being put in place all the time. Is there a sadder sight in the world than the face of a compliance officer when they open up their inbox in the morning only to find a new dictat from the local regulator to abide by?
With our society moving towards the brave new world of big data, will this be a bad thing for our industry? Without trying to sound like the Daily Mail and reverting to their stance on liberty (‘if you do nothing wrong, you have nothing to hide’), in this respect you can see only a positive outcome for an industry that can sometimes have an awkward relationship with transparency.
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