Trading Technology

12:39 PM
Phil Albinus
Phil Albinus
Commentary
Connect Directly
Twitter
RSS
E-Mail
50%
50%

The New Trader: Adapt or Die

As algos and high-speed networks do the heavy lifting during the trading day, what does the Buy Side Trader do all day? While interviewing sources for the April 2012 cover story Meet the New Trader -- to be posted shortly -- Megan Costello, director of North America Client Services of Fidessa, shared her thoughts.

Advanced Trading: How has the life of the buy side trader changed in the past 10 to 15 years? Things are more automated now and algos do the actual trading so what does a hedge fund or buy side trader do these days?

Megan Costello, Fidessa: Over the last 10 to 15 years, automation in trading has significantly changed the role of the buy-side trader. The goal of automation has always been to improve the efficiency of trading and to provide value for the trader. By using automation to take some of the volume out of the trader's hands, the trader can now give more focused attention to adding increased value to more complex trades. This includes making sure they are executing them in the right venue from a value perspective and understanding the market complexities that affect trades. They also need to interpret much more information in real time than they did a decade ago.

Advanced Trading: What skills does a new member of the Buy Side need these days? Should they know programming as well as have an MBA?

Costello: I wouldn't say that a new member of the buy-side needs to be a programmer. To be successful, a buy-side trader needs to be comfortable with the technology being used and have a high-level understanding of how it can assist with trading; however, they don't need to be a down in the details programmer. If a buy-side newcomer has an appreciation for technology and an awareness of how it can assist with the different venues and opportunities available, a honed skill in programming is not necessary.

Advanced Trading: Does every buy side trader need to be a quant?

Costello: Today's buy-side trader doesn't need to be a quant, but in terms of a dependency on algos, he or she does need to understand how the technology works to facilitate trading, and they must have the resources to drill down into the full details of the trade as necessary.

Advanced Trading: With automation do firms need fewer traders and more sales people? Is this more of a client management role these days?

Costello: Buy-sides might need fewer traders to perform the same functions due to the benefits of automation, but the value placed on client relations will always be there. When looking at what differentiates a buy-side firm or a trader, I think the client management piece is an important aspect of it. Whenever you introduce automation, some redundancy will happen; that's part of the efficiency that comes with the process. But that efficiency can never overcome the requirement to have strong relationships.

Automation also means a lot more can happen in a smaller period of time, and this has changed client expectations. Clients now want things done immediately and they want to see results immediately, which makes client management more important than ever. Traders are spending more time and emphasis on setting expectations with clients. With the amount of change going on in the industry at present, it is crucially important to educate clients on things like regulatory changes, for example, and how they will impact the trading relationship going forward.

Advanced Trading: Do young math grads even want to work for Wall Street these days or would they rather work at Google or Facebook? Have the capital markets lost their luster with smaller bonuses and Occupy Wall Street?

Costello: What's happening on Wall Street right now is a correction that goes on in every industry. It's much like when the tech bubble burst and Silicon Valley was affected for a short time. The same thing is now happening in the financial markets. In the long term, a career on Wall Street will not lose its appeal, but for now, other industries might grow while the capital markets continue to find their footing.

Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio
Comment  | 
Print  | 
More Insights
More Commentary
Leaving Out the Welcome Mat for Financial Services Hackers
Everyone knows the financial services industry is a prime target for hackers. Despite the dangers, many applications have software vulnerabilities that expose real risks.
4 Surprising Ways Firms Think About Data Security Costs
Almost 28% of firms are willing to bear the cost of some financial losses due to cybercrime, because it's less than the cost of upgrading IT systems.
CIO + CFO Doesn’t Equal Mars Vs. Venus
From my decades of experience, CIOs and CFOs have more in common than you may think.
Will Apple Legitimize Mobile Payments?
The company announced its new mobile payments system, Apple Pay, during a news media event today.
The Art and Science of Leveraging Cloud Infrastructure
Now that cloud providers have addressed many of the more practical concerns of their users, data segregation has become the major challenge in cloud deployments.
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - July 2014
In addition to regular audits, the SEC will start to scrutinize the cyber-security preparedness of market participants.
Video
Exclusive: Inside the GETCO Execution Services Trading Floor
Exclusive: Inside the GETCO Execution Services Trading Floor
Advanced Trading takes you on an exclusive tour of the New York trading floor of GETCO Execution Services, the solutions arm of GETCO.