Today, buy-side traders needs an advanced execution toolkit that includes a dependable OMS, flexible EMS, robust data and analytics, CMS software and actionable TCA, to name just a few.
Still, there's another invaluable resource that buy-side traders should keep close at hand: a brokerage partner that specializes in client education.
Given the complexity of today's market structure, regulatory matrix and trading technology, traders need to quickly assimilate a wide range of "Breaking News" topics and industry trends to stay ahead of the markets and keep pace with their core responsibilities: sourcing liquidity while minimizing the implicit costs of execution.
This is no easy task.
Here's a Pop Quiz:
1. What trading issues did BATS recently disclose?
2. What are the implications of the ICE acquiring the NYSE?
3. What happened to Canadian dark pools in 2012?
4. What is the SEC's latest stance on HFT?
How'd you do?
Most traders who follow financial market news can provide a basic answer to these questions, but having a solid understanding of the minutiae can also help traders maintain a competitive edge.
To get a handle on global market structure and regulatory issues, and how they impact execution strategy, the buy side should reach out to brokers who have made education and teaching integral to their culture and overall value proposition.
At Trader Forum's recent 2013 Winter Workshop and Equity Trading Summit in NYC, Gary Stone, Bloomberg Tradebook's Chief Strategy Officer, conducted an in-depth and highly interactive discussion about the convergence of global market structure trends. Trader Forum attendees were attentive and engaged. Feedback from the group was extremely positive. Similar discussions are planned for Trader Forum's European and Asia Summits later this year.
Brokers who specialize in sharing their proprietary knowledge about market structure, regulation and trade optimization are not just "execution consultants," they are true "execution partners." This special class of broker takes pride in empowering clients with information, data and knowledge about market structure dynamics, routing logic and venue economics. Ultimately, the most valuable brokers are conflict-free, transparent, and above all, confident that by sharing knowledge, they become a true partner in a buy-side trader's success.
The French proverb, "The more things change the more they remain the same" reminds us that although modern day traders live in a world defined by algorithms, dark pools and smart routers, the basic tenets of our business still prevail: 1) Transparency fosters trust, 2) Trust is the cornerstone of any healthy relationship, 3) Relationships remain the lifeblood of brokerage, no matter the asset class or "touch."
While these core principles may seem "old school" to some, the ideology will resonate with those who hope to thrive in the "new school" world of global, multi-asset electronic trading. Modern era traders are thirsty for knowledge. They view mastering the complexities of today's trading environment as a gateway to competitive advantage and professional longevity. In the end, execution partners that offer models based on the concepts of transparency and education will have the best chance of building a foundation of trust with the traders of today and tomorrow.
Welcome to the new old school.Robert Shapiro joined Bloomberg Tradebook in 2010 as the Global Head of Trading and Execution Consulting. Prior to joining Bloomberg Tradebook, Rob was the chief operating officer of global trading for Morgan Stanley Investment Management where he oversaw trade optimization ... View Full Bio