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THE OFFICIAL NEWSPAPER OF TRADETECH 2020
Traders adapt
to life at home
Following the removal of live interaction within
teams, systems being stretched and the ensuing
market turbulence, among multiple other
factors, Hayley McDowell finds traders could
be more error prone and risk vulnerable.
Continued from page 1
But the definition of normal has changed
with trading floors closed, systems and
technology tested and communication no
longer occurring in-person. Early discussions
with buy-side traders suggest that working
from home is not ideal and more high-touch
trading activity is taking place, as is often the
case in times of market stress.
“To be honest, working from home has
been miserable. But in terms of the set up for
remote trading, the process so far has been
quite smooth. The technology is so good
these days,” says a UK-based buy-side head of
trading speaking to The TRADE on condition
of anonymity. “We’ve seen more high-touch
trading as traders seek certainty and security
in having an extra pair of eyes. As traders gain
more confidence in the remote setup, I expect
that will revert back to low-touch.”
Massive change
A recent study from Refinitiv, which surveyed
400 of its FX trading clients globally, found
that 80% of banks in Europe have opted to
have staff split their working time between
home and a separate office or backup site.
Refinitiv explained that this highlights the
‘still somewhat dominant dependency of
sell-side staff on trading desks and trading
floors’ to ensure connectivity, compliance
and efficiency of execution that is needed
to perform their order-taking and execution
roles.
Business continuity plans may never
have stretched as far to encompass a global
remote working environment, along with
subsequent market turbulence and a full
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THETRADETECH DAILY
“To be honest,
working from home
has been miserable.”
UK-BASED ASSET
MANAGER HEAD OF TRADING
technology carryover for employees. For
teams used to information sharing in a live
format, particularly in markets that do not
trade electronically as much as others do, the
remote working environment could hamper
now dispersed desks.
“For those who work in a dealing room
or a trading floor, working from home is a
massive change,” says one European buy-side
head of trading who spoke to The TRADE
on condition of anonymity. “The use of a
laptop PC is particularly challenging when
you trade multi-asset order flow in a multi-
platform environment. This challenge has
been exacerbated by highly volatile markets.
All our team is adapting and learning, and it
is becoming more flexible under pressure, for
example by using much more telephone than
before or by improving and customising the
order management system’s layout on smaller
screens.”
A report from consultancy Aite Group,
which outlined the challenges and
opportunities caused by COVID-19 pandemic,
depicted front-office or trading tasks as more
challenging to perform at home, adding that a
higher degree of trade breaks and compliance
challenges are possible if functions are
somehow excluded or reduced in coverage.
Matt Simon, author of the report at Aite
Group, explains that for traditional asset
management firms, workflow of idea creation
to trade implementation is often the result
of a group interactive effort. Front-office
staff must have regular meetings with both
internal investment professionals and
external companies and trading counterparts
to guarantee optimal results.
Simon warns however, that replicating any
of these tasks in a virtual-only environment
reduces the number of interactions, and
will most likely negatively influence human
decisions that would be a part of the overall
decision-making process.
Some asset managers have been quick-
off-the-mark in terms of planning to
ensure that traders can continue working
from home without disruption, which was
carried out rather smoothly. As Simon
alludes, communication is key to this
process. Matthew McLoughlin, head of
trading at Liontrust Asset Management, says
his trading desk has been able to operate
as normal. Echoing the thoughts of the
European buy-side trading head on the
increasing importance of picking up the
phone, McLoughlin adds that in the current
environment, execution is now taking longer.
“There has been more communication as I
was very keen that we keep communication
channels open and ensure there are no
misunderstandings between teams or
individuals,” McLoughlin tells The TRADE.
“That being said, I have seen a large switch
from phone to instant messaging across the
market over the past few weeks, which has
worked very well. Email traffic has increased
too, but I have encouraged my team and
others to pick up the phone if ever something
needs clarifying as it just makes life easier
and quicker.
“I have felt that despite everyone’s hard
work, interactions on trades can take longer
to happen, particularly on the more high-
touch side of the business in both equities and
credit. With people working from home, it
just takes longer for a salesperson to speak to
their trader and then feed that to a client on
the other side and for all of that information