I believe the level of
urgency of a trade is
key. In negotiation
textbooks, ‘time’ is
an important asset
to hold when you
want to explore
alternative ways
to achieve a better
outcome
it, a good old IB chat or phone call is
quite often the most flexible way to
trade in those situations. It is not yet
possible to interact as interactively and
intelligently with an algo!
Which relationships do you need and
what is the required understanding of
your counterparties?
Negotiating is the heart of our job.
As quantitatively driven one can be,
the business and human context has
to be taken into account. One cannot
interact the same way with each
market participant.
First of all, negotiation textbooks tell
you that when negotiators appreciate
each other, people tend to show
greater flexibility when dealing with
each other. So, you need to take the
human interaction element into
consideration. Over the long run, you
tend to get better prices by having
the best relations with your business
partners.
Understanding what are the goals,
targets and business models of each
counterparty is also key. One cannot
approach two counterparties with
different goals the same way. Knowing
if a bank is in a market share mode or
not is valuable.
Trading is also an iterative process,
in the sense that the reputation each
player builds in this market has an
impact on the next trade. In that
sense, a desk needs to evaluate its
counterparties dynamically, not only
Summer 2019
Cyril at the 4 th ATF Fixed Income Paris
according to its own needs, but also
in the context of how your broker/
dealer aims to achieve its targets. Your
desk needs to constantly be wary
of reputational damage. Monthly
post-trade analysis (PTA) reports are
complementary tools for measuring
execution quality, observing
trends, outliers and outperforming
counterparties across all bond
segments.
Which knowledge and expertise does
a buy side need for price making?
As explained earlier, a trader needs
to understand the market and have
a view of why things are moving
and which direction he thinks it is
going. That’s the only way to interact
efficiently and quickly in illiquid
markets. One needs to be able to
move inside the bid offer spread and
quickly. There are no shortcuts there.
Is it better to pay a bit more for an
order or to wait? You need to be able
to take informed decisions on the run.
This question can only be handled if
you have a firm grasp of your market.
The quality of execution for illiquid
bonds is highly correlated with the
in-depth knowledge of these illiquid
bonds specificities as well as the
counterparties that can have the best
reach.
Regarding skills in relationship
building. Relations are needed as
part of your market intelligence, as
www.buysideintel.com
mentioned earlier, you need to know
what each actor can, cannot do or
even what they are willing to do.
Finally, a good grasp of the fund
strategies helps, but this is an integral
part of the relations you establish with
the portfolio manager teams, and a
good way to judge and establish the
urgency and context of each order.
Can you give a brief summary of your
career leading up to your current role
at Candriam?
Briefly, I have spent most of my career
as a sell-side trader on convertible
bonds and equity derivatives. Due to
the increasing capital requirements,
book sizes reductions and increasing
illiquidity, I thought I could leverage
my skills on the buy side to improve
Candriam execution capabilities on
illiquid assets and help build a strong
emerging market debt (EMD) trading
capacity. That’s basically what I have
been busy doing these last 3 years.
Who is Cyril Batkin outside of the
workplace?
As geeky as it sounds, I have a deep
interest in human sciences so apart
from socialising and travelling, I have
spent most of my recent time studying
political sciences and philosophy. But
with a wife in London and a job in
Brussels, my greatest passion lately has
been the Eurostar!
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