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“ We didn ’ t go into the volatile environment with 80 % of the franchise available , and say the other 20 % will be back when things are easier for us .”
DANIEL MALLINSON , MD , HEAD OF EMEA EXECUTION SERVICES , GOLDMAN SACHS
At the peak of the market volatility in March and April , Goldman Sachs Electronic Trading ( GSET ) saw volumes 135 % higher than the average trading day , with market data volumes processed by the platform almost tripling overnight .
Several years of intense investment across the GSET franchise was about to be verified by arguably its most rigorous test , as one of the greatest liquidity events unfolded in global markets .
From an eerily empty Goldman Sachs office building in the heart of the City of London , Daniel Mallinson , head of EMEA execution services , alongside co-heads of EMEA electronic trading , Alex Harman and David Cornish , tell The TRADE that throughout the COVID-19 crisis GSET has gained market share and broken several records multiple times over .
“ The resilience and reliability of our technology stack meant we had the ability to process those extraordinary volumes consistently during that period , and that was certainly a huge factor in us taking market share ,” Mallinson explains . “ The consolidation amongst the top five brokers was exaggerated during the extreme volatility . I believe a lot of that , in contrast to prior crises , was reflective of banks being able to provide a resilient operating model .”
As the crisis unfolded and volatility peaked , reports of gaps in liquidity and a lack of reactiveness from sales traders soon began to surface from buy-side traders . Some banks and brokers had no choice but to switch off entirely and pull back from the market , leaving many traders frantically adjusting strategies and seeking liquidity on-screen .
Similarly , the GSET team were conscious of the lack of liquidity in the marketplace and the difficulty clients were having in executing their flow .
“ Clients were much more vocal in what they wanted and needed from us instead of relying on the systematic aspect of the relationship ,” Mallinson adds . “ The ability to stay connected , whether that was on the telephone , Zoom , Skype or Microsoft Teams , was unbelievably important .”
Specifically , Mallinson notes that as volatility spiked clients experienced a decline in provision of principal liquidity . Conversely , over the last 12 months , Goldman Sachs has systematically provided $ 300 billion in principal liquidity globally , saving clients an estimated $ 50 million in execution costs in aggregate .
“ We over communicated our willingness to consistently be there for clients across the full spectrum of product ,” he adds . “ We didn ’ t go into the volatile environment with 80 % of the franchise available ,
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