[ E L E C T R O N I C T R A D I N G | G O L D M A N S A C H S ]
“ Gone are the days of having one sales trader as the only relationship for the institutional and hedge fund accounts .”
ALEX HARMAN , MD , CO-HEAD OF EMEA ELECTRONIC TRADING , GOLDMAN SACHS is ready to accommodate the new environment .”
With this forward-looking view in mind , GSET also targeted its capabilities in helping clients trade emerging markets . While a clear area of opportunity for many market participants and brokers , emerging markets are still considered difficult to trade .
The focus on emerging markets at GSET was client-driven , and the aim was to ensure that clients could trade emerging markets just as easily as developed markets . The business treats the emerging markets platform and developed markets platform as though it were a single platform , providing front-to-back capabilities that allows users to navigate those markets considered more challenging .
“ Our emerging markets franchise now has the same market share rank as our developed markets franchise , which is a huge win for us relative to where we would have been two years ago ,” Cornish explains .
“ Being able to provide the full-suite of services is incredibly important . It is not just about the execution platform – it ’ s also about stock loan , synthetic , foreign exchange , settlement , and operations . We are piecing all of that together , automating it , and making clients feel comfortable that they can trade Kuwait just as easily as they can trade France .”
Place your bets Despite the market share gains and progress that GSET has made in recent years , Mallinson emphasises that the job is nowhere near complete . Given that Goldman Sachs has a unique vantage point on the world due to its scale and resources , an important aspect of the ongoing investment in GSET is placing bets on what its clients will need in the future .
Similar to emerging markets , which remains a significant bet for GSET , the team sees opportunities in exchange traded funds ( ETFs ) strategies . Like the US markets , clients in Europe are seeking more ways to trade ETFs on-exchange , alongside the more typical request for quote ( RFQ ) strategy .
With this in mind , GSET is preparing to launch new strategies this quarter for clients to trade ETFs more effectively both on-exchange and via principal through its algorithms .
Perhaps unsurprisingly , the closing auction is another GSET wager . Closing auctions have increasingly become the most important part of the trading day . The percentage of full-day volume executed at the close has soared from around 15 % around five years ago , to nowadays often more than 25 %.
Goldman Sachs was one of the first banks to go live with a systematic product for its passive clients that guarantees market on close , known as GMOC . It has been live for around eight years in the US and five years in Europe .
Building further on this , GSET has developed an advanced target close strategy and a portfolio algo focused on the close benchmark amid increased demand from institutional clients for basket-type strategies .
“ It is our job to make these bets based on what we think our clients are going to need in the future . We want to build around those bets and advise our clients on exactly why that ’ s the bet we are making ,” Mallinson says . “ We make no secret of what those bets are – we are fully open . It ’ s as important to our culture as it is to our business strategy .
“ From a top down point of view , principal liquidity is a big bet for us . A vast amount of that principal liquidity is linked to the products and strategies we are preparing to roll out .”
For quantitative funds , Goldman Sachs is spending upwards of $ 100 million on developing a new highspeed equities trading platform , known as Atlas , which has already inspired the development of other products under the GSET franchise .
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