Here's the deal

City banks can use a virtual trading floor to train budding masters of the financial universe free of risk

Not every mishap in the financial markets is on the scale of Barings or Morgan Grenfell, but they are frequent enough to convince financial organisations to do something to improve standards. Thanks to the latest multimedia technology, banks and other institutions can strike at the two main problems - the fact that traders do not generally have any experience of dealing until they are on the floor and doing it, and the fact that employees tend not to have any means of telling how good a trader is.

Deal Dynamics - launched last week by ad satis interactive, a recently formed subsidiary of the financial market consultancy and training firm ad satis - is said to be unique in combining the latest in training techniques with up-to-the-minute technology to create "a virtual foreign-exchange dealing room environment".

Much like the simulators used to assist the training of aircraft pilots, it works by creating a situation in which the trainee can learn without risk. The only difference is that the user does not have to don a weird headset or step inside a kiosk. All that is required is a fairly standard computer equipped with a quad-speed CD-Rom drive and sound and the three- CD package that contains the teaching software.

Ad satis envisages banks buying the package - at pounds 9,500 each, pounds 35,000 for a dealing-room licence covering five copies or a corporate rate of pounds 80,000 for 20 copies - and setting up trainees with headphones in training rooms so that they can progress at their own speed. But it would also be possible for individuals to take the equipment home in the evenings and "bookmark" their place in the package.

Unlike some products that claim to enable communication between the machine and the user, the Dream Dynamics product is genuinely interactive, with the voice of the hardened forex dealer commenting on the trainee's performance becoming increasingly sharp and impatient as more mistakes are made. In addition, there is a knowledge zone that can be referred to for definitions and further information at any stage of the session.

Each of the three CDs deals with a different level of dealer expertise. The basic level is Learn FX, which is aimed at graduate trainees and teaches such skills as how to quote prices correctly, how to calculate profits and how to work at the speed required of a dealing room. Next up is the Master FX, which - unlike the basic tool - assesses the individual's ability to make money. The final level is called Conquer FX and is especially valuable to employers since it enables them to assess abilities in such categories as risk, accuracy and response times.

Directors John Sheehan and Michael Smethurst, who share backgrounds in the financial markets, claim to be attracting great interest from institutions that are convinced multimedia training is the way ahead. They also accept that - just like their predecessors in the aviation industry - individual traders will be reluctant to submit to such detailed analysis.

"But that's not the point," says Mr Smethurst. "The industry needs to be seen to be doing something about improving standards."

Ad satis believes institutions will find it so useful that they will extend its use to support staff on the grounds that they need to know how the dealers work, to traders working in other areas, because tougher competition is forcing firms to look more closely at cross-selling, and to experienced traders on the grounds that the system might highlight areas of weakness that can be improved upon.

Moreover, it sees this as the first in a suite of products covering other financial markets and is confident that the next two to three years will see such advances as a voice-activated product