[ I N - D E P T H
|
S A L E S
on portfolios, market colour, news,
information on trading axes, flows
and blocks—in effect look after the
client portfolio from a top-down
perspective.
“The buy-side needs help to
monitor what is happening in the
market,” says Matthieu Chardot,
head of business development and
client relations at BNP Paribas
Dealing Services. “Sales traders
will see the flow from hundreds of
clients potentially and can be an
invaluable source of information to
help buy-siders to monitor what is
happening in the market.”
Chardot says that sales traders
can see toxicity or if HFT firms are
front running flows in dark pools
thus combining their traditional
skills with those of a quant.
MiFID II – blessing or a curse?
Understanding each individual
client in detail—the contents of
their portfolios and how they like
to interact with the market—is an
invaluable asset to have. In some
cases the sales trader’s work might
actually involve monitoring the
individual portfolio itself.
“We are small but we get a decent
service from brokers on a daily
basis,” says Paul Mumford, fund
manager at Cavendish Asset Man-
agement, a specialist in smaller
stocks. “We look at smaller compa-
nies so we’re important to smaller
boutique brokers. At the same time
they will watch the stocks for me—
if I’m on holiday on the beach and
something happens they will ring
me so we get a pretty good service
actually.”
Undoubtedly the increased
complications in the market from
32
TheTrade
Spring 2017
T R A D E R S ]
“If I’m on holida
y on
the beach and so
mething
happens they w
ill ring me so we
get a pretty goo
d service actuall
y.”
PAUL MUMFOR
D, FUND MANAG
ER ,
CAVENDISH ASSE
T MANAGEMEN
T
a regulatory standpoint have also
boosted the importance of the sales
trader role. Steering buy-siders
through new edicts is a task sales
traders are increasingly sought for.
“The key problem with trading
is that there is too much informa-
tion,” says Christian Voigt, senior
regulatory advisor at Fidessa.
“Compliance is becoming more
complex with more rules and so
on. You need a smart way to filter
it out and find the relevant stuff.
That’s where the sales trader
comes in. They can be your guide
through the market.”
One of the key developments
likely to impact the sales trading
business over the next few years is
the Markets in Financial Instru-
ments Directive (MiFID II). By
leading to a decline in free research
offered to buy-siders, MiFID II
may well see less investor involve-
ment with unfamiliar assets which
in turn could impact sales traders
who have built a role in helping
investors tap these assets.
“Under MiFID II banks will cut
research – less research on illiquid
names means fewer will want to
buy this,” says Horan. “As the mar-
ket becomes more focused on pas-
sive investments—which is likely to
happen under MiFID II—the sales
trader will continue to evolve.”
Others believe—conversely—that
MiFID II might actually boost sales
trader work at houses with special-
isations in particular assets. SG’s
Sherman says that MiFID II will
encourage more investors to use
specialist brokers as the general
scope of their research dwindles.
“Come 2018 all the shackles are
off,” he says. “For SG it’s an oppor-
tunity. The cross asset execution
expertise we have and the ability
to source equity blocks put us at an
advantage. We have been position-
ing for this for 12 to 18 months.”
It could work both ways. In any
respect it seems that it is too early
to write off the sales trader. Ma-
chines, good as they are, have not
replaced the human touch.