THETRADETECH DA I LY
behavioural.
“Home working for traders was a rarity
in the City prior to this, and as such, a huge
amount of hardware was required to be sent
to peoples’ houses to ensure they had remote
access to trading capabilities and telephone,”
Springett explains.
“Once the physical capability is in place
people need to adapt their working practices
to ensure that they can be as effective in a
geographically fragmented organisation.
Person-to-person directed communication
is straightforward, but a significant value of
trading floors comes from being immersed
in conversations going on around oneself. It
is the benefit of information being gleaned
from these, as well as the ability to contribute
to them, that is much harder to re-create at
home.”
As the Aite Group report highlights, when
putting together business continuity plans,
few asset managers and banks ever dreamed
of the implications of portfolio management
or trade and trade-support scenarios all
having to be done from a home office.
Simon adds that given the volume of orders,
messaging and trading, firms are clearly
more error prone and risk vulnerable.
Echoing Springett’s concerns around the
loss of vital information that could be used
for investment and trading is John Ashworth,
CEO of trading software provider Caplin.
He explains that while this is less relevant
due to the electronification of markets, the
repercussions in the near-future could see
the industry adopt a ‘new normal’ in remote
working and trading.
“In days gone by, when trading rooms
were noisy places, there was a huge amount
of subliminal information contained in
background noise that individual traders
would absorb to inform trading decisions,”
Ashworth explains.
“That effect is minimal nowadays since
there’s so much electronic trading, but is
still felt to some extent and will be missed
amongst the very largest global banks and
some super-regionals. My personal belief
is that this enforced ‘new normal’ will lead
to a dramatic change in the way managers
manage, and how people view remote
working.”
Complacency is not an option
But rules and regulations are still as
important for traders working remotely as
when they were in the office. UK market
participants have been urged by regulators to
continue capturing records and data as firms
latest news
THE OFFICIAL NEWSPAPER OF TRADETECH 2020
“Home working for traders was a rarity in the
City prior to this… a huge amount of hardware
was required to be sent to peoples’ houses.”
BEN SPRINGETT, HEAD OF EUROPEAN ELECTRONIC AND PROGRAM TRADING AT JEFFERIES
moved staff to alternative sites or working
arrangements. Compliance technology
provider Cappitech has warned on the risks
and importance of maintaining regulatory
obligations as traders are working from
home.
“Working from home has become the
most common approach for firms to
mitigate the spread of the virus in their
offices,” Cappitech said. “Although working
from home is an option, it does have its
pitfalls. Most financial regulators include
telephone and electronic messaging record
requirements. As such, companies need
to confirm that remote work options
include methods to comply with existing
regulatory standards… The reality is that
even the most prepared firms will have
gaps in their contingency plans. One way to
spot regulatory functions that aren’t being
“Despite everyone’s hard work, interactions
on trades can take longer to happen,
particularly on the more high-touch side.”
6
MATTHEW MCLOUGHLIN, HEAD OF TRADING, LIONTRUST ASSET MANAGEMENT
THETRADETECH DAILY
completed or that will need to be fixed in the
future are through control tools.”
Regulators have provided various
temporary relief measures globally for
reporting and auditing, but they have
been clear that the environment should be
established by the trader or support staff
as a means of ignoring ethical practise and
securities rules. EU authorities have delayed
best execution reporting requirements
in Europe, while uncleared margin rules
(UMR) and the Securities Financing
Transactions Regulation (SFTR) have all
been postponed as firms focus on handling
the new business environment.
“Getting complacent is not an option. If
you haven’t been monitoring and reporting
on your activity you will be in trouble,” Matt
Smith, CEO of compliance and data analytics
provider SteelEye, tells The TRADE.
“Regulatory reporting and crucially, market
abuse monitoring, still needs to be done,
especially during this time. In fact, financial
crime is more likely during uncertain
times and we are seeing some very strange
behaviour and non-standard trading patterns
in the market. To combat this, the regulators
have been very clear about the fact that firms
are still firmly ‘on the hook’.”