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“ is nothing more challenging and relevant now than the aggregation of fragmented liquidity in all asset classes, especially in fixed income,” says Miles Kumaresan, global head of trading and FinTech at Nordea Asset Management.“ I’ m consumed with this problem.”
Enhancing Nordea’ s ability to source liquidity in the fixed-income markets, particularly in the credit space, is the most prominent conundrum facing Kumaresan. Having spent the bulk of his career with investment banks and hedge funds, Kumaresan is now applying his experience with the Copenhagen-based asset manager, having joined the firm in February 2016 with the dual responsibility for Nordea’ s trading and technology teams.
24 // TheTrade // Spring 2018
“ I was never a born trader,” he says.“ I was one of these guys who could create tools to help with execution. Everything that we are doing now is to create tools; where they already exist we will use them, but if they don’ t exist then we will create specialist tools for the traders, either in liquid or illiquid brackets. This is what we do.”
It is, of course, a futile exercise to implement technology tools without the right teams in place to use them. As well as its 26 traders located in Copenhagen, Bergen and Stockholm, Nordea has invested in a five-person trading research and development team and a five-person IT team focused on trading, a reflection of the company’ s recognition that technological innovation is critical to staying competitive.
Building a diverse team An efficient trading operation requires a diverse set of traders, ranging from classical to quan- titative, to enable it to thrive. Kumaresan says that Nordea has a strong base of experienced traders to which it has added three junior traders with strong quantitative and IT skills, brought in last year.
“ Everyone in trading has their skills enhanced continuously wherever they are lagging,” he adds.“ This is how we were able to retain all of our traders during transition and leverage off their depth of experience. Stacking the desk with only cheaper junior talents was never an option.”
The first thing to take care of in the process is risk rather than reward, according to Kumaresan. Operational mistakes can occur extremely easily with manual repetitive tasks and some of these errors can be very costly.“ You need to automate all the operational instructions at every part of the pipeline, starting at the order source, all the way down to it hitting the trading desk,” he says.
Nordea’ s trading structure has evolved throughout the two years Kumaresan has been with the firm, the primary of which is the division of teams by instrument liquidity across asset classes first and then by specialisation.
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