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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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