His new role comes amid Schroders’ shift of its operations from Zurich to the London office, wherein a team of four is set to be put in place, The TRADE understands.

Tring previously worked as a junior trader for Smith & Williamson before moving onto Evelyn Partners where he worked across a range of asset classes. He has also previously worked for Aviva Investors as a transaction reporting analyst.

Speaking to The TRADE about his appointment, Tring said: “Schroder’s is a fantastic firm, and I can’t wait to get to get started. The role itself is something that appealed to me greatly, so I was obviously delighted when it was offered to me.”

Earlier this month, Tring was recognised as one of The TRADE’s ‘Rising Stars’, a prestigious awards scheme now in its ninth year as part of Leaders in Trading.

The award is designed to recognise the very best up-and-coming buy-side trading professionals and has recognised numerous promising talents over the years, many of whom have gone on to expanded roles such as head of trading at some of the world’s largest asset managers and hedge funds.

The post Evelyn Partners dealer to join Schroders appeared first on The TRADE.

As part of the newly expanded agreement, Schroders now runs all of its externally sourced data on Xceptor’s processing system, removing the need for multiple applications, end user computers and end user developed applications.

The pair claimed the expansion will allow Schroders to eliminate risks associated with manual data entry, as well as leverage process “uniformity” to better streamline its operations.

“The selection of Xceptor by Schroders highlights the value our data automation platform brings to the financial sector,” said Michiel Verhoeven, chief executive officer at Xceptor. “By eliminating manual data input and consolidating applications, we’re empowering Schroders to achieve operational resilience and significant efficiencies.”

The announcement builds on an existing relationship between Schroders and Xceptor which saw the active investment manager use the platform to process incoming transfer agency cashflows into its investment book of record, BlackRock’s Aladdin.

“The initial phases we entrusted to Xceptor comprised of critical business functions which the platform handled exceptionally well,” said Peter Hilborne, chief operating officer, operations, Schroders. “By consolidating all other various applications into Xceptor, we have radically transformed how we process and automate data.”

The partnership is the second major announcement made by Xceptor in the last few months after it also partnered with Delta Capita to streamline post-trade services in the lead up to T+1 settlement.

The post Schroders streamlines data and operations automation through expanded Xceptor partnership appeared first on The TRADE.

A recent Coalition Greenwich report delved into the top trends affecting FX market structure, pinpointing ‘higher cost of accessing credit’, ‘more electronification of trade execution’, and ‘changing credit provision by banks’ as the main drivers.

Particularly from the buy-side perspective, increased use of cleared FX derivates was also a key consideration according to 37% of surveyed respondents. 

Read more – CME Group on the evolving FX futures and options landscape

A study released yesterday by DataHorizzon Research predicted that the foreign exchange software market size – valued at $7.9 Billion in 2022 – will have a market size of $16.4 Billion by 2032 (a compound annual growth rate of 7.6%). 

Drivers of this, according to the research body, includes rising competition among the key players and high technological adoption, further stating: “In addition, high spending on technology is expected to encourage the adoption.

“[…] Large organisations dominate the foreign exchange software market due to high spending capacity.”

Earlier this week, Ganesh Iyer, chief marketing officer at IPC Systems, highlighted that the FX ecosystem’s increasing complexity was down to the rapid proliferation of counterparties, service providers, execution platforms, and products, suggesting that the focus for market participants was firmly on the pursuit of an integrated trading infrastructure.

Iyer explained that the goal is for that technology “to connect all participants in the transaction lifecycle – buy-side firms, sell-side platforms, exchanges and liquidity providers, clearing/settlement systems, market data providers et al”.

In this vein, market participants are demonstrably making moves at an increased pace, the most recent example being buy-side player, Union Investment, executing its first FX futures trade through Deutsche Börse’s 360T and confirming its intention to implement its EMS in a bid to enhance its execution capabilities.

Speaking in an announcement, 360T explained that the fact that regulatory changes have the potential to theoretically increase costs when it comes to trading FX forwards across OTC channels, will likely make its offering increasingly attractive to market participants going forward.

Speaking to The TRADE this week, Christoph Hock, head of multi-asset trading at Union Investment, said: “What’s important for us when executing – not just in FX but all asset classes – is to get the very best outcome for our investors. Not just best execution, also the regulatory requirements. Our goal is to be connected to the very best platforms and have the best breadth of broker firms on this platform, enabling us to play the white keys, the black keys and the pedals of the piano.”

Results from the recent Coalition Greenwich study on this topic, empirically demonstrated that desks are increasingly investing in this space, aiming to enhance trade execution by prioritising data and workflow management in a bid to keep up with the increasingly complex FX markets. 

The study found that of the top five overall investment priorities for FX desks, three relate to the theme of data and two to workflow, with Coalition Greenwich emphasising the link between these two areas, explaining that “data and workflow go hand in hand; without a systematic workflow, it is difficult to actually get the data.”

The TRADE’s recent exclusive interview with Gordon Noonan, head of FX and rates trading at Schroders, delved into the most important elements with respect to these data capabilities in FX products. 

“On the data front, the swaps market continues to remain opaque with forward pricing not as visible as the spot market. Pricing across banks vary materially in the swap space,” said Noonan, who further added that “as trading technology further advances along with the increase in availability of datasets, it has become even more essential for trading desks to leverage these capabilities to improve execution decisions, maximise efficiency and reduce risks.”

Read more – FX derivatives trading can be streamlined through electronification, but data quality must be assured, say experts.

Also speaking to the specifics around technological requirements earlier this week, Iyer asserted: “In the 4.0 technological age, and with an increasingly tech-savvy demographic occupying traditional trading roles, product and service differentiation must tick new – and many – boxes beyond efficient market access. Managed service solutions enable market participants to easily shop around, enabling freedom of choice and unfettered access to best-of-breed components in the trading stack.” 

The post Market participants deep in preparation as FX market changes ramp up appeared first on The TRADE.

As trading technology further advances along with the increase in availability of datasets, it has become even more essential for trading desks to leverage these capabilities to improve execution decisions, maximise efficiency and reduce risks. Traders will need to be able to develop skills that will allow us to use these tools to solve for trading challenges. This can range from improving programming skills (python, SQL, etc.) data visualisation (Tableau/Power BI) and understanding electronic communication protocols (FIX connectivity, FDC3). In the future, there will be an increased focus on the use of data science to improve performance in our industry.

What opportunities do you think DLT can provide to enhance trading and settlement efficiencies?

DLT has the potential to significantly enhance trading and settlement capabilities, removing friction and asynchronous data from the current ecosystem. We should see a reduction in numerous participants maintaining individual datasets across disconnected platforms, eliminating the need for reconciliation. Self-executing smart contracts embedded in assets could perform servicing functions such as settlement, confirmation and payments. We are monitoring developments related to atomic settlement, or near-simultaneous settlement, and think the upcoming moves of markets to T+1 will highlight key challenges to be explored. These include the protocols on how different DLT networks connect with each other, the regulation governing trading and settlement of DLT assets and the liquidity profile of these assets.

How can execution styles be adjusted to access efficient liquidity in high volatility environments?

The key skill set of a trader is to adapt their execution style to changes in liquidity and volatility regime with a view to obtaining best outcomes for clients. It is important for us to understand which strategies work best in each liquidity regime and react accordingly. The key for us is having systems available that signals regime changes, allowing us to switch to proposed strategies on demand without the need for excessive manual intervention. We continue to partner with our EMS partners and bank counterparts to improve capabilities on trading platforms and algorithms to achieve this.

Do you see a shift to more multi-asset trading hubs? What more needs to be done to facilitate this?

We are certainly seeing a trend develop over recent years of desks moving to a more multi-asset trading model. Asset class experts will continue to be a vital part of any trading desk but there is certainly room for multi-asset traders who can move seamlessly between asset classes as required. To achieve this, more commonalities should be found across asset classes so that the technology and processes can be streamlined and increase scalability. This allows for more capacity to focus on the more niche areas in each asset class that cannot be normalised.

With respect to data and electronic execution capabilities, which FX products need the greatest focus and improvement? 

On the data front, the swaps market continues to remain opaque with forward pricing not as visible as the spot market. Pricing across banks vary materially in the swap space. While the majority of FX products are tradable in the electronic space, work still needs to be done on communicating market order types and limit price restrictions, protocols widely available in the equity space. Option pricing is the one area where we need to see movements in the electronic space as it is still a manual execution process for many market participants.

The post The ever-evolving landscape of the trading desk appeared first on The TRADE.

Schroders needs little introduction. The buy-side giant closed 2022 with over £737 billion in assets under management and kept its head above water last year despite weathering, alongside its peers, some of the most challenging conditions the markets have ever seen.

The institution – now well over a century old – was also named one of the best places to work in 2023 by Glassdoor. And after spending a morning with the equities trading desk, you can see why. High above the hustle and bustle of London Wall and nestled amongst the City’s infamous skyline sits a team of traders that seem genuinely fond of each other.

In the equities market, no two days are the same. The market could see an influx of orders or very few whatsoever. In Europe, this irregularity is worsened by daily liquidity that has been largely stagnant for the last five to six years in comparison with the US and Asian markets. Pair this with volatility caused by the pandemic and Russian invasion of Ukraine, fragmentation across just shy of 30 trading venues in Europe and now regulatory divergence between the UK and Europe post-Brexit and you have a perfect storm that just a handful of traders have the required skillset to truly do well in. 

For the Schroders team, all of these factors make a diverse trading team with a range of skillsets essential to survival, with attention to detail and concentration as the two most important characteristics in a trader. 

“Traders are plugged in for almost eight and a half hours a day for the longest trading session in the world. At the same time there’s an element of patience as markets are inefficient and prices can be volatile,” says head of the equities trading desk at Schroders, Guy Alcock, who took over the reins mid-pandemic in July 2020. 

Diversity of thought

There are six traders in total on the desk, including global head of the multi-asset trading team, Gregg Dalley. The traders are divided by sector in developed markets and then also specialise in emerging markets, a structure that mirrors that of sell-side institutions. They work in pairs – Gregg Dalley and Damon Burkett, Dan Trusler and Doug Fokuo, and Jay Hockey and ChiChi Wang, to ensure someone is always covering a specific area of the market. 

“Traders are split by sectors in European developed markets and split by country when it comes to emerging markets as these markets tend to have country specific nuances.  Outside of equities traders are split by specialist security types including futures, options, ETFs and programs,” adds Alcock. 

A key contributor to the team’s success is their range of perspectives and the toolkit this has given them to deal with a range of different scenarios. The team have arrived at the equities trading desk from a variety of backgrounds and have trading experience that ranges from months to decades. Damon Burkett is one example of this – starting his career at Schroders in settlements on the FX side, a valuable skillset in today’s market environment as traders try to navigate the macro environment globally and regulatory developments around T+1. He then moved over to FX trading and then finally, migrated to equities. 

“Having different mindsets has helped us to look at our trading processes in a different way,” says Alcock.

Trader-in-training ChiChi Wang has also not had the typical journey to the trading desk. Wang originally joined Schroders in 2013 during the upgrade of its order management system which was at the time Charles River. She then helped the team oversee its transition onto the Aladdin OMS platform in 2018 – an extensive process that took three years – taking the desk from multiple systems to one investment book of record.

Her potential during both the Charles River upgrade and Aladdin migration was spotted by global head of trading, Gregg Dalley, who saw first-hand the important role that expertise in process improvement and change technology could play on the desk. 

“Gregg was always very keen to have somebody in the team with a change and technology background, leveraging technology to improve processes,” says Wang. “I’m hoping that as I move through the other asset classes, I can leverage my day-to-day skills to improve efficiencies through technology and process changes.”

The augmented role of humans and technology 

Like its peers across the buy-side, technology has continued to play a bigger and bigger role in how the trading desk operates at Schroders. Traders are reducing clicks on low touch flow to focus their efforts on the alpha-generating high touch volumes. In the last decade, the European equities team’s split in value traded in terms of high touch/low touch has moved from 80-20 to around 50-50.

“This has evolved over the years as our assets under management have grown and the complexity of our workflows have increased,” says Alcock. “Given the attributes of our orders in Europe we execute 80% of our tickets low touch. By improving efficiencies and increasing automation it allows us to spend more time focussing on high touch/block liquidity that have the biggest impact as they can produce the greatest alpha whilst reducing trading cost. High touch will always play a large part in the lower end of the market cap scale because there just isn’t the functionality or the infrastructure to be able to trade those markets electronically via algos.”

The advancement of the team’s trading technology has meant that as the team has boiled down to an efficient team of six, Schroders’ assets under management have roughly doubled in the last 10 years.

“Since joining the desk as part of the Cazenove acquisition in 2013, the Schroders AUM has roughly doubled but the number of traders globally is lower than it was a few years ago,” says Jay Hockey. “The increased usage of algo wheels and better data around algo selection has enabled us to create scale without taking on extra traders, whilst additionally adding workflow efficiencies and automation.”

Not just any old algo wheel 

Overseen by Jay Hockey, Schroders’ algo wheel is not just any algo wheel. With the help of the firm’s head of electronic research, Schroders have created a proprietary model that both randomises broker selection and bases it off of performance to ensure two-pronged best execution. The wheel is overlaid with a quant model that sits in an API between the team’s OMS and the wheel itself. Before an order hits the wheel to select a randomised algorithm, the random forest model has also made a forecast based on nine trading variables as to which broker it thinks will offer the best execution based off historical data for that order.

“Industry wide use of algo wheels was borne out of taking the away bias on the individual trader and originally our use of algo wheel routers was designed in a similar way,” says Hockey. “By using a part randomised and part ‘rewarded’ routing logic we’re able to continually train the model and provide an extensive feedback loop to our trading partners. This post-trade learning enables banks to continually learn and understand where they fit into the feature space. In time this creates competition to improve performance thus aiding our ‘best outcome’ approach.”

This proprietary quant model has meant the desk at Schroders has been able to better rank brokers and subsequently reward more flow over time as the system has gathered data to base its decisions on. The system has doubled down on the team’s best execution efforts by reinforcing a feedback loop between brokers and the trading desk – brokers rewarded the most are the ones achieving the best results by working the closest with the team to cultivate what they are offering them through AB testing and communication. 

One page EMS

The key takeaway across all of the desk’s technology is that adaptability is key – the development process is never at a standstill. Communication and responsibility for their individual areas of expertise are key on this desk and their chosen execution management system (EMS) is no exception. Guided by Damon Burkett, the desk is consistently developing its Virtu Triton EMS.

“You should never stand still on anything. You should always be improving and developing. If you’re saving 30 seconds here, that’s 30 seconds you could be spending on something else, over the course of the day that adds up,” says Burkett. “The first thing we look at [when selecting an EMS] is speed to market. Making sure that we have an efficient trading process by routing our orders as quickly as possible by reducing the number of clicks.”

Perhaps most key to Burkett’s development ethos is simplicity of use – a key tool when dealing with the unpredictable and volatile equities markets. The system favours a one-page setup where all information can be accessed with minimal clicks.

“You want a trading system that has all the execution tools available but easy to use to minimise errors. We never know when we’re going to be busy. Some days there could be a pickup blotter full of overnight orders. You have to have very clearly defined trading procedures on how to handle large volumes of trades whether trading multiple program lists, individual blocks order or other security types,” explains Burkett.

Schroders’ EMS is also overlaid with their transaction cost analysis capabilities – something on the wishlist of many buy-side firms looking to advance their analytics capabilities. Previously a compliance tool, TCA is now a must-have in today’s best execution environment. 

“The industry has changed a lot over the years but for the better, everything is more streamlined, we have more responsibility and more pressure for sure,” says Burkett.

Looking to the future 

The Schroders trading desk is focused on its fund managers when looking to the future. As a dedicated fund management house, optimising the way the desk works with portfolio managers and within the wider Schroders organisation is a key focus for the team in the next few years, particularly around data and how they communicate it.

“Schroders are looking at ways of increasing liquidity direct to portfolio managers by matching flows versus watchlists that will allow us to consume a larger quantity of broker flows whilst improving efficiencies,” says Alcock.

The desk appears hyper aware that the best way to drive alpha for its fund managers while also driving down costs is by finding new ways of accessing liquidity. With markets unlikely to calm down and recession looming, this survival strategy might come in handy in the next 12 months.

The post Schroders on European equities: Attention to detail is essential appeared first on The TRADE.

In the second of two episodes The TRADE sits down with participants from Ninety One, Schroders, Invesco, SIX and Liquidnet to explore the global regulatory debate around dark trading.

Non-displayed trading has become the poster child for regulatory divergence between Europe and the UK post-Brexit. While, in the US, the Securities and Exchanges Commission (SEC) is also undergoing its biggest shake up in equities trading rules to bolster best execution, with many of the changes designed to shine a light on its now bulging dark markets.

This episode explores the shifting regulatory agenda around dark trading in Europe, the US and Asia, as well as how dark trading could be developed further to be more innovative.

If you missed episode one you can find it here.

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The wait is over. The TRADE’s dark trading documentary series, in partnership with Liquidnet, is finally here.

In the first of two episodes The TRADE sits down with participants from Ninety One, Schroders, Invesco, SIX and Liquidnet to unpack the genesis of dark trading.

With non-displayed trading now playing a central role in regulatory change across the globe this episode aims to explore just how we got where we are today: exploring how and why dark trading was brought to the market, key users and use cases, how it was received by participants and how the infamous term “dark” was first coined.

Don’t miss Episode two: due to go live on Monday 20 March!

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The asset manager cleared non-deliverable forward (NDF) trades across a wide range of Asian and Latam currency pairs. ForexClear member, Citi, facilitated the trades as Schroders’ clearing broker.

LCH ForexClear has seen continued growth within its FX client clearing services, with increasing numbers of buy-side firms acknowledging the importance of margin and operational efficiencies, as well as enhanced risk management available through FX clearing.

“With Phase 6 of the Uncleared Margin Rules implemented from September 2022, ForexClear has seen a growing number of firms choose to clear their FX trades,” said James Pearson, head of ForexClear, LCH.

“We warmly welcome Schroders as the first European asset manager as it looks to benefit from the margin, capital, operational and credit efficiencies available through FX clearing. We look forward to partnering with Schroders and others in expanding our product offering from NDFs to also include options, forwards and swaps.”

In the first nine months of 2022, LCH ForexClear registered a record $19.1 trillion cleared in total notional, up 17% year-on-year.

In Q3 this year, LCH ForexClear experienced a record quarter for non-deliverable FX client clearing volumes at $140 billion, 146% higher than in Q3 last year.

“Implementing ForexClear is an important step in increasing our central clearing capabilities for our global clients,” said Stephanie Whitford, global head of derivatives services at Schroders.

“ForexClear offers increased transparency, reduces counterparty risk and strengthens liquidity in the FX market. Schroders are delighted to be the first European asset manager utilising this service and will be looking to increase our client and clearing broker usage over the coming months.”

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BNP Paribas has selected Brian Gallagher to replace retiring head of cash equities execution for EMEA, Antoine Bisson. Bisson has held the role for the last 10 years and has previously held positions at Deutsche Bank as head of execution services for EMEA and Morgan Stanley as its head of program trading for continental Europe. Gallagher, who has been based in New York with BNP Paribas Exane since 2019, has been promoted to the role and will be based in London, according to an internal memo seen by The TRADE. Before joining BNP Paribas, he served across various roles at Instinet and BIDS Trading and notably spent 14 years at Morgan Stanley in electronic trading and Delta One focused roles.

In a similar move, State Street selected its former head of FX sales, trading and research to replace retiring APAC head of global markets, Michele Hardeman. Henry Quek has been appointed as head of global markets for the region, replacing Hardeman who has spent the last 24 years with the bank. During her tenure with State Street, Hardeman served in several senior roles including as global head of foreign exchange sales, head of foreign exchange sales for the Americas and head of foreign exchange Australia. Quek assumes the role after serving at State Street for the last 18 years, most recently as head of FX sales, trading and research. Prior to his most recent role, Quek also operated as deputy general manager for State Street Global Markets’ Singapore branch.

Former execution trader at Trefoil Capital Advisers, Keith Clinker, was appointed as a vice president, portfolio sales trading at Citi. He leaves Trefoil after just five months, where he was responsible for execution trading for long and short equities across Europe, the US and Asia. Before Trefoil, Clinker spent nearly 14 years with UBS Investment Bank, joining its middle office in 2006 in a cash equities role and later becoming an associate director and director in portfolio trading and sales trading.

Moon Capital Management’s managing director and partner for global equity trading, operations and portfolio management departed for pastures new. Michael Pelliccione confirmed in a social media update that he has left Moon Capital after almost 10 years with the firm. Before joining Moon Capital in 2008, Pelliccione spent several years in operations focused roles at Morgan Stanley, JP Morgan Chase and Lehman Brothers. Pelliccione has not yet revealed where he will be moving to next.

Schroders appointed Darren Bustin in a newly created role within its solutions division, effective 1 September. Bustin brings more than 15 years’ investment experience to the role, having specialised in derivative investment overlays and derivatives trading. He joins from Royal London Asset Management (RLAM), where he served for over a decade, most recently as head of derivatives. In his new role Bustin will work the solutions team to develop and improve existing products and solutions across fixed income, structured equity and derivatives.

Electronic market maker Optiver appointed Anish Puaar to join its European corporate strategy team. He joins from Rosenblatt Securities, where he served as head of European market structure for the last seven months. Prior to that he spent just over seven years as a market structure analyst. Puaar began his career as a reporter for The TRADE in 2008, spending five years with the publication and later becoming its editor for just over a year in 2012. He later spent a year and a half at Financial News as a trading and technology reporter. Puaar’s new role at Optiver will initially focus on European equity market structure, including new products, regulation and exchange relationships.

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Bustin brings more than 15 years’ investment experience to the role, having specialised in derivative investment overlays and derivatives trading.

He joins from Royal London Asset Management (RLAM), where he served for over a decade, most recently as head of derivatives. As part of his role at RLAM, Bustin helped institutional asset owners across pensions and insurance manage their risk exposures and implement strategies to take advantage of market opportunities.

Before RLAM, Bustin spent two years as head of derivatives solutions for Aegon Asset Management and as an associate director at Aladdin Capital Management.

Previously in his career he also spent two years as a volatility and structured credit trader at BNP Paribas and a year as a junior trader and convertible bonds trader’s assistant at JP Morgan.

In his new role Bustin will work the solutions team to develop and improve existing products and solutions across fixed income, structured equity and derivatives.

“I am delighted that Darren Bustin is joining the team,” said James Barham, executive chairman of Schroders Solutions.

“Darren’s appointment will further support our clients and our development as we focus on the next chapter for our growing business.”

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