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Following the height of Covid, we’ve had the memestock saga, the collapse of Archegos Capital and the war in Ukraine impacting the space in concurrent years as unprecedented events seem to have become the norm, driving market volatility in each of the post-pandemic years. These forces have rumbled markets and led to heightened volatility.
As a trader, I think it is critical to build strong relationships with portfoliomanagers, brokers and various internal teams, and this is something I look forward to and enjoy on a daily basis. I like how certain assets have their own nuances and are impacted by different market events.
Increasingly, clients are looking for more advanced methods of liquidity seeking, in particular in harder-to-trade stocks during liquidity events, such as the close and monthly expiries. Most algos are based on a schedule and that schedule can be interrupted by events.
Dominic Rieb-Smith, managing director, international head, prime services sales, JP Morgan, refers to the past year as “a standout”. Data from Convergence tracking the top 25 prime brokers showed their market share grew from 83.3% in April 2023, to 92% in 2024.
Joining us is Richie Seaberry, Vice president of Business development and Enterprise PortfolioManager at decisely. So, you know, those are two very important big life events that are tied to your employer providing those to you. And that could be anything from pregnancy to, you know, getting a scary mole. So you think about it.
Papanichola began his career at interdealer broker, GFI, however quickly realised the environment wasn’t the one for him. We weren’t a dealing desk, we were a trading desk so we actually took and actively managed positions but were also the eyes and ears for the more traditional PMs within the firm.
Having a cohesive team globally has proved an increasingly essential tool for institutions in light of the ongoing globalisation of finance and the turbulence caused by market events in the last few years. For him, it is the correlation between real world events and the markets that drew him to his role in finance in the first place.
While traders don’t have the authority to load up trades, outside of execution they are expected to collaborate with their portfoliomanagers to bring value add to the investment process by making suggestions around idea generation and execution. The trading team work closely in tandem with portfoliomanagers when preparing a strategy.
That buy-side trader would speak with their portfoliomanagers, and that portfoliomanager could then potentially respond to the liquidity opportunity that is being presented to them. What they don’t have is the requirement to be everywhere, all the time.
“We view this as a complement to broker led avenues of liquidity, not as a replacement.” As a result of this, traders are left with increased capacity to focus more on executing larger orders and value-add idea generation for portfoliomanagers. “The But they also promote transparency which is key to trust building.”
He joined DWS Group a year later as a portfoliomanager and worked his way up through the ranks, going on to lead teams of PMs focused on a range of instruments that stretched across asset classes. But Eppacher began to notice a distance between himself and the day-to-day action of what was happening in the markets.
Now more than ever, traders need to be plugged into news events, both stock specific and macroeconomic news and need to have a strong understanding of the read across between markets, for example single name credit default swaps spreads versus the stock or corporate bond spread.
These systems touch upon all elements of the trading lifecycle throughout the front-to-middle-to-back-office including execution, order, risk and portfoliomanagement. Unpredictable activity in the markets such as Black Swan events can render algorithms that rely on historical data useless and result in losses for firms.
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