How do you see the centralised dealing
desk delivering cutting-edge value to
the buy side? Is there an industry wide
increased justification for centralised
dealing across your asset class
responsibilities?
Each house is different. Where you
have a small shop with niche product
suites, centralised may not be a viable
option. The buy side is extremely
competitive, we are challenged at many
levels and having an efficient value-
added trading function is just a part of
Traders are also the eyes and ears of
the market for the fund and given the
number of data points hitting them
today, it’s essential that we have the
tools to manage this flow to benefit
our funds.
the competitiveness of the industry.
Fortunately, we have (the scale) that
enables us to centralise and bring
those benefits to the forefront of asset
management.
What are the key deliverables of
the fixed income trading desk in the
investment process?
We have seen fixed income traders
becoming much more involved in the
investment process, particularly when
it comes to liquidity assessment. Our
traders are involved at the portfolio
construction stage to help portfolio
managers assess what the liquidity
conditions are likely to be on the way
in, and potentially the way out of the
investment. This is all done prior to the
pre-trade analysis at time of execution,
where we have proprietary and third
party tools at our disposal to help make
the best informed decision and record
it every time. Traders are also the eyes
and ears of the market for the fund and
given the number of data points hitting
them today, it’s essential that we have
the tools to manage this flow to benefit
our funds.
What are your key messages to the buy-
side firms who still solely rely on their
custodian relationships for FX trading?
technology that was well-established
in the equity markets now becoming
business-as-usual in FX and some fixed
income trading. Technology adds real
scale to the business in a risk managed
fashion. It allows us to optimise
staffing, and to draw upon the value of
experienced traders on the desk.
Which hurdles are the buy-side
trading desks facing to adapt new
technologies and make choices
between best-of-breed and multi-
asset solutions?
“New Platform Fatigue”. Any buy-side
head of trading will tell you that over the
last few years they have been inundated
with pitches to the next trading platform
across multiple products. With now over
100 bond trading platforms alone, we
have to clearly assess which platforms
are likely to add real marginal benefit
to our business. Couple this with the
process of on-boarding a platform
through legal, risk, compliance and
operational due diligence
before a go live, then writing
Technology adds real scale to the
up as part of procedures is
business in a risk managed fashion.
quite a lot of heavy lifting on
It allows us to optimise staffing,
our side. We have partnered
with our preferred platforms
and to draw upon the value of
across each asset class and
experienced traders on the desk.
had an influential voice in
their development. We are
unlikely to be asking for development
Clearly this is not the only consideration
that can’t be used at the next buy-side
when making this decision as a client,
client so it’s usually to the platforms’
as prime brokerage relationships
benefit. Additionally, we also have to
come at a cost, and reporting is also a
pick partners we know will still be in the
consideration. However, we owe it to
business in five to ten years’ time.
our clients to provide them with the
information that will help them make
What are the characteristics of the
the right decision for their
brokers who come out on top in the
needs.
changing capital markets?
How do you see trading
We constantly evaluate how we access
technology increasingly
our markets. Brokers that provide
adding value to the
scalable technological solutions
trading desk and how do
(automated market making, pre/
you expect this to evolve
post trade TCA capabilities, dynamic
over the next few years?
algorithmic suites) with balance sheet
capabilities have been shown to win a
Technological competency
greater proportion of our business.
is at the centre of any agile
We have seen the traditional business
trading desk. We have seen
“Caveat Emptor!” This is still clearly a
very profitable business for the clearing
banks, especially in anything even
remotely exotic (outside G10) or long
dated. I think the case is quite easy to
make to clients. We can run the stats on
a particular account against benchmarks
where we think we could have executed
and present the P&L differences to
clients to make an informed decision.
Adrian at the 7 th annual ATF Global Summit 2019
26
www.buysideintel.com
Spring 2019