THETRADETECH DAILY THE OFFICIAL NEWSPAPER OF TRADETECH 2023
Marc Wyatt : How to meet growing multiasset demands
Head of global trading at T . Rowe Price , Marc Wyatt , speaks to The TRADETech Daily about the push for multi-asset trading capabilities , the benefits of operating an agile multi-asset business and the challenges associated with building the trading desk of the future .
What is driving the push for multi-asset trading capabilities ? There are a number of macro trends driving multi-asset trading . Markets are increasingly interlinked and signals in one asset class often have implications across assets . It is mission critical that trading has line of sight on these correlations and how they change over time . It is harder to do this with siloed trading teams . Our institutional clients continue to seek solutions over individual products . This trend also requires portfolios with broader access across different instruments , especially with derivatives . Finally , liquidity is becoming more constrained . Whilst volumes can appear elevated , what is important is the size that can be executed on at a point in time . The top of the order book across asset classes is shrinking and the depth of the market is becoming shallower . This directly impacts the cost of trading . When implementing an investment thesis , there may not be sufficient liquidity to implement directly at the right cost in the instrument of choice . This may require thinking about implementation more creatively and looking across asset classes and derivatives for the most efficient expression of an idea . We have formed multi-discipline teams not only to highlight opportunities , but also to identify risks and build tools to optimise outcomes .
“ Markets are increasingly interlinked and signals in one asset class often have implications across assets . It is mission critical that trading has line of sight on these correlations and how they change over time .”
What are the benefits of operating an agile multi-asset business ? I like how you framed the question as “ agile multi-asset ”. Agility is important to ensure ideas and opportunities are flowing correctly across the platform , enabling our investment team to capture alpha for clients . With “ agile athletes ”, we can redeploy resources to supplement talent in asset classes that are in focus . Some skills and experiences are transferable ; however , it is important to understand the nuances and risks of each instrument . This means that leveraging the subject matter expertise of the core team is essential . Another benefit comes from the insight that different perspectives can bring . These ideas and insight come together to help us make better decisions and provide a more informed understanding of what is driving pricing across markets .
What are the necessary capabilities required to successfully meet growing multi-asset demands ? An integrated approach which combines investment excellence , trading / market structure acumen , robust / reliable data , technology , quantitative insight , legal , interoperability , and ability to adjust to meet the needs of the opportunity . Relying on “ the way we ’ ve always done it ” will , over time , lead to suboptimal outcomes , missed opportunities , and leave alpha on the table . Leaning into the relationships we have built with our sell-side partners , as well as current and emerging liquidity platforms , is essential . We need to share our collective pain points and work to develop solutions which reduce friction and increase access to
24 THETRADETECH DAILY