THETRADETECHFX DAILY from the floor
Multi-asset trading : Reduced errors and enhanced high touch execution
The TRADE and JAMES BARNETT , trader at Manulife Investment Management , discuss the value of one multi-asset trader managing both execution and hedging and the importance of utilising available resources and partnerships to maintain a specialist service on a cross asset desk .
What are the benefits of merging trading across asset classes ? The key benefits of merging the trading function to be multi-asset have to come down to efficiency and scale , both as it relates to the execution of trades but also on how the trader operates when observing markets , providing market colour and looking at data . Technology is at the forefront of this movement and the electronification / automation of many parts of the execution function allow the human element of trading to be more focused on larger , more complex trades that carry greater risk and as the role of trading develops , into other areas of the overall asset management business .
Key among them being the provision of market colour and adding to the idea generation process . The trader of today has to be able to distil a vast amount of disparate information and filter it in a bespoke fashion to the needs of individual portfolio management teams . The benefits of doing this across asset classes allows traders to build a broader view of the market each day , allowing them to spot market correlations and offer market color at a wider scale , fostering insights and knowledge-sharing across various market landscapes .
On the execution side , having the experience of trading across multiple assets and liquidity landscapes allows a trader to apply key learnings from one asset class to another , you are constantly learning and increasing your adaptability which gives you more tools at your disposal when trying to achieve best execution .
It ’ s true to say that alongside the role of trading , the structure of portfolios is adapting to contemporary trends and fewer portfolios today are truly ‘ single asset ’, as portfolio managers look to access more markets or hedge their exposures in different ways , it helps for them to have a single access point to all these markets rather than a more fragmented approach .
How does the skillset of a multi-asset trader vary from a single asset trader ? And why are more desks merging asset class trading now ?
Multi-asset traders must be able to adapt to multiple different liquidity dynamics on the fly . That requires the ability to utilise many different execution methods , be it electronic , RFS , voice , bartering , understanding the mechanics of algos . The full range is required , and you are required to be an expert at all of them . Each corner of the market is different in its etiquette and liquidity and as a trader it ’ s imperative that you can switch seamlessly between them and be able to take a view on what works best in each scenario to achieve what is best for your underlying clients .
Alongside the role of pure execution , traders of today must wear multiple hats , especially when executing across multiple asset classes . Traders must have both a macro and micro view of the market at any given time to allow them to engage with teams in conversations on macro strategy , advise them on market microstructure , as well as monitor and analyse TCA data on a pre- and posttrade basis .
On why more desks are merging asset classes , clearly the ability for traders to
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