“ Would trading desks be bigger if we didn ' t have the electronic trading platforms ? Absolutely yes .”
“ Very often the incumbents are better positioned to fill those gaps , highlighting the difficulty of breaking into this space .”
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Automation for scale For an institution the size of State Street Global Advisors , electronification and automation are essential for them to continue to trade at the scale that they currently do . When Ruffles joined SSGA she sat on a desk of two .
“ Would trading desks be bigger if we didn ' t have the electronic trading platforms ? Absolutely yes .”
She now runs a desk of five in London and two in Singapore . SSGA ’ s trading headcount now totals 37 with desks across asset classes in Hong Kong , Boston and its newest desk in Singapore set up in 2021 .
“ Would trading desks be bigger if we didn ' t have the electronic trading platforms ?” asks Ruffles . “ Absolutely yes . However , our day-to-day trading volume is fairly significant . We trade on average about 500 trades a day just for the EMEA desk . On our last business day , that multiplies by 10 taking it to 5,000 but with the same amount of people . It gives you a sense of what the systems enable us to scale .”
Venues will now likely turn their attention to building out the electronification of blocks in fixed income , Ruffles says , but caution must be used to ensure information leakage is minimised . Smaller sized tickets have made their way onto venues but a big portion of fixed income trading still happens bilaterally , particularly in larger sized orders .
“ There are larger tickets that are still being traded by voice . If you ' re a vendor or an MTF it would be natural to say since Covid and the advent of electronic trading in smaller size what ' s the next thing I go for ?” Ruffles says .
“ They ’ ll likely want to get more of that bigger size ticket business . But in reality how much bigger size ticket business is there to do and how are we trading today ? You can only trade a block if there ' s a block available to trade so sometimes conversations still need to happen in order to work out where that that liquidity is and where that size is . How do you negotiate that without revealing too much about the trade on an electronic platform without moving the market away from you ?”
SSGA has been building out its emerging markets hard currency and local book of business as of late , and Ruffles highlights that many of these markets vary in their use of electronic trading , maintaining the need for skillsets in voice trading on the trading desk as well as an understanding of electronic trading solutions .
“ For a lot of those markets , they either don ' t trade electronically or they ' ll trade in much smaller size electronically . The size becomes a lot more significant in terms of how people will price if you ' re too free with the information ,” she says . “ To that extent , a large volume of our trades will still be executed by voice in order to prevent information
“ Very often the incumbents are better positioned to fill those gaps , highlighting the difficulty of breaking into this space .”
leakage , which could negatively impact our ability to efficiently execute certain trades .”
The constantly shifting macroeconomic backdrop after years of Covid-fuelled turmoil is acting as a catalyst for change in fixed income . Traders like SSGA ’ s Ruffles thrive in this environment . Which is lucky , because it looks as though change is here to stay .
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