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“ If that falls down, then the whole process falls down.”
range everyone ' s happy. It ' s trying to understand where we sit on the bank ' s panel, whether our flow is deemed as good flow or problematic and does pricing to us change accordingly? That ' s where we rely on trade cost analysis,” explains Baker.
“ You might receive a trade on your pad and if you ' ve got the luxury of two or three hours, you can do some fantastic pre-trade TCA, but realistically you ' ve got two or three minutes before you can start to go to market. It ' s about giving the traders the ability to know in advance where they should be pointing the trade. We ' ve started doing more machine learning.”
The benefits of TCA are not limited to execution, affirms Baker. T. Rowe Price, like many of its peers on the street, is also exploring how this information can be used to understand and potentially change how decisions are being made upstream of the trading desk.
“ We ' re working with our market structure team to do a deeper dive on the cash team that raised the tickets. Can they improve the process prior to that? When are PMs giving us the trade tickets? Is it during the best liquidity time of the day?,” he says.
“ If not, are you then inhibiting the trader’ s performance by giving them something that they know is difficult but they need to get done? You can’ t always avoid that, but if we can find better ways of enlightening everyone involved in the process that there are better liquidity windows and we can access them, then it gives us the ability to speed up, slow down, or hold a trade for a longer period of time.”
The future Looking ahead, Baker is clear on the innovation set to make the greatest splash in foreign exchange: instantaneous settlement. While North America moved to T + 1 for its post-trade cycle in May 2024, Europe, the UK and Switzerland have set out plans for their own shifts to take place in October 2027. The next step would be instant settlement via blockchain, as seen in markets such as crypto.
“ T. Rowe Price did a test trade on the blockchain trade in the sand pits. Anything that can reduce trillions of dollars getting pumped around on a daily basis is going to be a cost and efficiency saving,” says Baker.
“ There ' s going to be less chance for erroneous trades going off and not being able to be pulled back. The technologies of blockchain will drive all assets going forward. It ' s how we start to implement that in the EMS’ and our general workflow.”
Like many in his seat, Baker is continuously assessing what might improve the trading desk’ s workflows in order to optimise outcomes for their clients. In his 24-year tenure he has helmed the foreign exchange desk through many storms and will likely see them through many more.
24 // TheTRADE // Q2 2025