[ MEET THE DESK | RBC BLUEBAY ASSET MANAGEMENT ’ S LONDON FIXED INCOME DESK ]
“ There may be instances where an electronic trading platform is used for efficiency , namely programme type inflow / outflow trades . Occasionally , we also use an RFQ trading venue for say $ 3 million to $ 5 million notional size of a liquid credit if our direction is contrary to risk sentiment on a given day , for instance buying into weakness or selling into strength which can often result in attractive trade entry or exit levels .”
Working in tandem with Raja in this area of the business is 21-year and 16-year BlueBay longstays Jo Morris and Mark Harrison . Harrison has been in the industry for almost 43 years , seeing the markets through some major shifts and events . My word is my bond , he says , stressing the need for a handful of core counterparties that can be relied upon come rain or shine .
“ There are five or six banks that I have a global partnership with and have the backing / support of their global heads of sales and trading . This close relationship helps when we have very large rebalancing trades to do . They will price the block size for me sometimes even in credits they would not normally trade ,” he says .
“ Emerging markets trading can be more challenging than developed markets due to the overall size of the markets . When executing larger orders , you need to work in with the sell-side and be 100 % transparent with this approach . It ' s when you speak to the wrong people that the information flow can get into the market and prices change drastically .”
However , in light of the importance of relationships in the emerging markets credit space , turnover on the sell-side in their emerging markets trading teams - especially in the US - has become something that acts as a hindrance to liquidity access , Harrison explains .
“ It is really hard for the big banks to build and maintain a global franchise with this turnover of traders ,” he says . “ Banks are always looking to win market share and employ the best people , so if needs be they will pay up for the right person and that can cause a kneejerk reaction and a merry go round of trader moves .”
Local nuances For emerging markets trading , the devil is in the detail with how a trader approaches executing on behalf of their portfolio manager . Different
50 // TheTRADE // Q3 2023