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Anatomy of A Trading Floor--ING Investment Management

ING Investment Management's 8-seat equities trading desk located on Park Avenue in NYC uses the Charles River OMS, various dark pools of liquidity and many brokers' algorithms to execute orders.

ING Investment Management's equities trading operation has gone through a transformation over the past two years, since Nanette Buziak, head equity trader, took the helm. When Buziak joined ING, she was charged with consolidating the firm's two trading floors — one in Hartford, Conn., and the other in New York. The result is an eight-seat trading desk and equities investment operation that handles trading for $60 billion in domestic and international equities. The consolidated floor is located on Park Avenue in Manhattan.

The reorganization was done to create better communication among all of the professionals that take part in the investment process, including portfolio managers, analysts, traders and compliance officers. "I believe trading to be a source of alpha within the equity investment team," says Buziak. She explains that by restructuring the desk, her traders are now configured as investors. How so? "The setup is such that the traders sit in the middle of the room and the analysts and portfolio mangers sit around us — that's the way to achieve that goal, the way to have the right communication and dialogue between traders, PMs and analysts," notes Buziak. "We need communications on what's driving a trading decision, as that helps us do our job. If we know there is urgency in an order, or there might be news coming out after the close that might affect the stock — if we don't get an immediate hit in natural liquidity, we know we need to get more aggressive."

Conversely, Buziak continues, "The traders may see developments that might impact the way a stock is trading. Our traders will bring that information to the PM as it may affect investment decisions."

Another key to the new setup, according to Buziak, is having a compliance officer sit at one end of the desk to quickly clear up any compliance issues. Also critical to the improved performance of the desk was reorganizing it by sector. Buziak explains that the portfolio manager or analyst now knows who he or she should communicate with on the desk as they know who has interest in a name. "On the Street, everyone has the right contacts because the sell side knows how we are configured, and information doesn't fall on deaf ears," she says.

Buziak also has instituted a morning trading meeting that everyone in the equities investment organization is invited to join — including PMs, analysts, etc. "Everyone has to be knowledgeable of what's going on in the sectors," she says. "We kick off with an international update. Perhaps something has happened that might have a derivative impact on our markets. Then we kick in economic news, drill into each sector and go over key information or news, significant upgrades or downgrades, etc. Lastly, we open it up for comments. Analysts or PMs can comment or talk about any big changes they'll make during the day." The PMs and analysts also run a meeting at the end of the day that the traders attend, Buziak adds.

Having the entire investment team sit in the same room is a setup that more buy-siders are moving toward, relates Buziak. How has this affected trading performance? The firm's funds have jumped up into the first quartile, according to Buziak. She also notes that there has been a 22 percent reduction in trading costs over the past two years.

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