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“It has changed almost beyond recognition; the buy-
side trader has become greatly empowered over the
last 20 years,” he states. “We are seeing an evolving
skillset. I don’t want to say it’s a different skillset,
because there are some stocks or situations that don’t
lend themselves to electronic trading whereas there
are some that do. Part of the skill is to identify what
strategy to use in what situation.
“Part of that comes from experience, some if it
comes from pre- and post-trade data. It’s honestly a
mix. You can’t just have a technologist and you can’t
just have a high-touch trader, because those two are
morphing closer and closer.”
A cohesive blend of skills, market expertise and the
ability to follow your instincts are now required for
a successful trading desk and Miller states that the
buy-side trader has become more of a price maker
than a price taker, in line with the market evolution
away from the historic quote-driven model towards
an order-driven approach.
“The buy-side trader has to become more
involved in the electronic side from a liquidity
capture point of view. Price discovery isn’t as a
straightforward as it used to be.”
The buy-side’s involvement in the price making
process has also been accentuated by the growing im-
portance of and opportunities created by technology.
Miller also highlights the “gut feeling” that traders
have always relied on that is now being increasingly
quantified, for both internal performance and exter-
nal compliance requirements in the search for best
execution.
“What we are now doing is recording our rationale
behind the trading decisions, as much as we can,”
he explains. “It’s not proprietary, but every trade is
tagged, and we believe we are ahead of the curve in
doing this. Every time we do a trade there will be a
reason recorded for it.
“There may be many reasons, but we’re now ap-
plying that to our systems to rewrite the tape, if you
like, to produce a more efficient and useful timeline.
The pre-trade expected impact cost is tagged and the
post-trade rationale is also tagged. We can produce
quite an accurate picture of what we have done and
use that result going forward.”
A big part of that “science” element of the toolkit
is the correct use and understanding of pre- and
36 // TheTrade // Winter 2019