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“ It was an obstacle to overcome in terms of gaining the expertise for trading these new asset classes .”
you were relying on a high-touch desk , then you risked losing a lot of time and not getting anything done . The quickest way to trade in those severe market conditions was through electronic platforms , which were robust and suffered no disruptions .”
In options , Champenois and Marie-Françoise agree the volatility was particularly extreme . With large options trades , the desk often opts for request for quote ( RFQ ) with its counterparts , but they explain the quotes and prices were so wide that in most cases they didn ’ t want to trade . In the end , it was easier and more effective to go onscreen with direct market access ( DMA ) and avoid losing precious time amid wild price swings across the market .
“ I think the sell-side did the best they could under the circumstances ,” Marie-Françoise says . “ It was clear that some of their taskforce was at home , others were in the office , but everyone was all over the place . We are a bit more centralised , so maybe the way in which brokers are set-up made the process less effective . It is an unprecedented situation and we have all had to adjust
ERIC CHAMPENOIS , HEAD OF MULTI-ASSET TRADING DESK , UNIGESTION
to the new landscape . Fortunately , the DMA and electronic channels were our safety net .”
For algorithmic benchmark-style usage , Champenois and Marie-Françoise witnessed market participants increase their adoption of percentage of volume ( POV ) and implementation shortfall ( IS ) amid the volatility to minimise risk and opportunity cost .
Unigestion ’ s trading desk also adapted its processes and strategies to combat the high intraday volatility and handle large rotations , depending on the nature of the flow . When using an IS benchmark , Champenois explains the open slippage sometimes multiplied two or three times in less than an hour making it even more difficult to trade .
Both traders had agreed with investment lines to be more passive for multi-days USD neutral rotations and sliced orders gently during the day rather than act aggressively . In these cases , they switched from IS benchmark to volume weighted average price ( VWAP ) benchmark , knowing that from a transaction cost analysis ( TCA ) perspective , it is their main valuation metric . While this meant risk increased slightly , in the end everyone agreed it was better to get the trade done .
“ The thing with these rotations is that you may have two or three
“ The addressable liquidity is very difficult to evaluate and the more venues you have , the more difficult it becomes .”
STÉPHANE MARIE-FRANÇOISE , SENIOR VICE PRESIDENT , EQUITIES TRADING , UNIGESTION
days of volume to trade on some stocks and the opportunity cost and open slippage we were moving so much in such a short amount of time that to us , it didn ’ t make sense for us to trade quickly ,” Champenois explains .
“ That ’ s why communication between traders and the portfolio
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