London-based Lam announced his new role on social media.

He has previous experience across multi-asset trading and his past roles include stints as a multi asset trader at Manulife Investment Management and BNP Paribas Asset Management.

Read more: Fireside Friday with… TT International’s Jean-Charles Sambor 

In addition, Lam has also previously served as an FX and futures trader at Amundi, as well as a finance analyst at KBC Financial Products, and an operational analyst at Citi.

The post Jupiter Asset Management trader joins TT International appeared first on The TRADE.

Jupiter Asset Management has signed a five-year deal with asset management software provider Room Zero in order to optimise its operations across the business.

Specifically, Room Zero will consolidate Jupiter’s assets under management and flow information into a single dataset, having consolidated over 30 databases into one, with 140 active Jupiter users on the system across finance, client group and the C-Suite.

The move comes as the asset manager seeks to better meet its clients’ needs and streamline operations.

Maximilian Guenzl, co-head of the client group at Jupiter Asset Management, said: “We recognise that technology is a crucial and differentiating factor in an asset manager’s ability to deliver a seamless and high-quality experience for clients.

“This is particularly important as the needs of wholesale and institutional clients converge. As we continue to develop our business to better serve our clients’ evolving needs, we welcome Room Zero as a partner.”

While AuM’s and flow data are usually managed by multiple separate teams, Room Zero is set to allow multiple departments to work and process common information. 

This is done through the software provider’s cloud-based software which eliminates duplication of effort and silos.

Richard Warrington, co-founder of Room Zero, said: “Jupiter is now handling data feeds covering mutual funds, hedge funds and segregated accounts on our software. As a result of the work with Jupiter, our software now accommodates sophisticated retail clients, as well as institutional asset managers. It’s great to work with industry innovators like Jupiter.”

In a similar vein, earlier this year buy-side heavyweight Schroders opted to streamline its data and operations automation through a new phase of its expanding relationship with data automation platform, Xceptor. With this expansion, Schroders is set to eliminate risks associated with manual data entry, as well as leverage process “uniformity” to better streamline its operations.

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This departure from the traditional sell-side – Credit Suisse became the latest to exit in March – has paved the way for new liquidity shaping trends in fixed income. Non-traditional liquidity providers such as Flow Traders, Jane Street, Optiver, and Citadel Securities have made waves in fixed income and all-to-all platforms provided by the likes of MarketAxess, Tradeweb and Bloomberg have exacerbated this – offering buy-siders a chance to face off against firms they might not otherwise have been connected with.

The proliferation of exchange traded funds (ETFs) and flows in fixed income has also enabled a more consistent approach to pricing on the buy-side. All of these contributing factors have led the buy-side to become more proactive as opposed to reactive when it comes to finding executable pricing and minimising opportunity costs, driving them into the arms of alternative liquidity options while the sell-side are unable to swing the bat in size. Increasingly, the buy-side are becoming price makers as opposed to price takers. However, the key hinge to cementing this trend as mainstream is data access.

“There’s been an increase in the willingness and ability to leave latent liquidity in the marketplace to try to get things done in a slightly different way,” explains head of trading at Jupiter Asset Management, Mike Poole. “I don’t yet see an increase in confidence around the price at which larger size will clear. There’s still some reticence on the buy-side to leave larger orders to trade at a certain price because of the lack of transparency that persists but for smaller sized absolutely.”

Tools available 

In light of this, venues and vendors have been quick to respond by innovating to accommodate this new buy-side demand for control over liquidity and pricing. As willingness to leave latent liquidity in smaller size in the marketplace has grown on the buy-side, anonymous platforms such as Liquidnet’s dark pool and UBS’ credit trading solution, UBS Bond Port, have come more to the fore.

Anonymous all-to-all platforms provided by MarketAxess, Tradeweb and Bloomberg – which allow both buy- and sell-side firms signed up to the platform to trade with one another, including buy-side to buy-side – have also grown in popularity in recent years. This has been exacerbated by canvassing from venues and the ongoing offboarding trend seen across the industry, as participants try to reduce costs by trimming down the number of counterparties they use. 

One of their chief selling points is that they allow buy-side to buy-side ‘market making’, reducing costs as the liquidity provider doesn’t need to capture the spread as in traditional methods of trading because the platform acts as an intermediary to absorb risk. They also come bundled up with tools offered by venues such as artificial intelligence-based predictive composite pricing which combines consolidated data sources with valuable trading data harvested on their platforms to offer users a more accurate reflection of where instruments are pricing. 

All-to-all platforms, however, allow for some degree of information leakage. Unless one restricts a request, your cares are advertised, albeit anonymously, to all users of a platform and there is a fee associated with expanding that network. Revealing cares in the market without any footprint is central to much of what the fixed income buy-side is trying to achieve – opportunity cost is the biggest challenge they face day-to-day, particularly in fixed income where instruments trade far less frequently.

“One way of getting around that [uploading cares without information leakage] – and it’s something that’s been attempted a number of times in the market – is auctions or certain times of the day where there might be a liquidity aggregation,” says Poole. “You put orders into a platform at certain time and maybe there’s an attempt to execute it at mid-price that could help you reduce opportunity cost.”

“On some of the platforms you can search by ticker and see what did not trade, which gives valuable colour. You can see that people have been looking for the offer in a certain credit and it hasn’t traded anything north of a million all day but people who have been looking for the bid have been able to sell in larger size. That suggests the bid is a bit deeper and if you’re trying to buy then perhaps what you need to do is try in smaller size. You can formulate a strategy without really leaking too much information.”

Aware of the desire for a more tailored approach to uploading cares, Bloomberg is set to introduce a new functionality to its all-to-all platform, Bloomberg Bridge, in the fourth quarter – allowing buy-side firms to post their indication of interest via axes anonymously.

“Bridge Axe will offer buy-side the opportunity to post axes anonymously to Bloomberg,” says Paul Kaplan, global head of credit, equities and TRS at Bloomberg. “If someone wants to engage on those axes, they will be able to go directly to that counterparty or they can choose to expand their inquiry to the full Bloomberg Bridge network.”

Data is king 

Central to the success of all-to-all and similar anonymous platforms, is data. Data is essential to buy-side confidence in price making, allowing firms to build a clear picture as to how and why an instrument will price to give them best execution – something they are expected to be able to prove thanks to Mifid II requirements.

“If I go out and advertise that I’m the seller of a bond at 90 or 90.5, I need to be able to capture alternative data to prove that that was in fact the correct level for the bond,” explains Ninety One’s head of trading, Cathy Gibson.

Alongside the growing realm of all-to-all, new artificial intelligence-based tools have continued to launch aimed at giving traders a clearer picture of the market – ultimately giving them more confidence and autonomy over where things are pricing. Liquidity analysis tools such as Ediphy’s new Liquidity Checker that offers users real time notifications of shifting liquidity and solutions such as Wavelabs’ eLiSA credit trading system that includes predictive pricing solutions for bonds based off of TRACE data in the US, have come to market as of late. Data remains paramount for equipping the buy-side with the information they need to correctly and confidently price.

“What’s difficult for us as an active manager is knowing where larger size clears and that’s the lack of data that’s always been the issue in fixed income,” adds Poole. “There are opportunities out there to know where and how things are clearing, such as the dealer sweep and some post-trade tools, which come at a cost. Until we have more colour on that I think there will be still reticence to leave large orders without knowing where they might trade. The consolidated tape of the future is seeking to solve that. Without that consistent resetting of where risk can get priced and where investors are willing to put money to work, long only managers especially will remain reluctant to make those prices.”

The need for quality pre- and post-trade data has only been exacerbated by Mifid II and best execution requirements where firms – especially if when making prices – must prove they have serviced their clients to the best of their ability. Without reliable data, institutions lack the conviction to price make effectively. While firms are every day becoming more and more sophisticated using composite tools and advanced TCA, more work needs to be done. Markets that can naturally have less transparency like credit and the emerging markets will likely be even further behind the curve.

The success of all-to-all offerings hinges on data. They have had more success in the US thanks to consolidated public data sources and a subsequently much higher see rate for instruments that have meant the buy-side in the US have committed significant resources to pricing back. However, the lack of a similar consolidated data offering in Europe and the UK has slowed the progress of all-to-all, as those limited few with access to a valuable and clear picture of the market are more reluctant to leak that to others. 

The consolidated tape for fixed income is one potential solution and has been confirmed by regulators on both sides of the channel. However, it has not yet had an implementation start date agreed upon in either the EU or the UK. Meanwhile, key aspects of it such as deferrals, flags and who the provider will be, are yet to be decided. The likelihood is we are still a way off and until prices move away from being indicative to being more commoditised, mass adoption of all-to-all is likely a way off too.

“We have to be careful also because if the transparency regime is causing damage by information leakage too soon in a cycle, it will affect banks’ appetite to take on risk positions if they don’t feel that they’re protected enough. There’s a trade-off to it as well,” says Gibson. “It’s catch-22. The high value add of me going out and price making is on stuff that doesn’t trade and where possibly there isn’t much transparency around it. Unfortunately, the situations where I would envisage being happy to go out [and price make] are also the ones where transparency on the market is probably not as high as other areas.”

Essential, and still lacking in the market, are clear indicators around liquidity type. The type of liquidity accessible in the market has massively changed in recent years – exacerbating the need for clearly defined flags in the consolidated tape of the future in order to understand why a transaction has happened alongside historical trade data.

“The buy-side would be potentially more willing to show their cares if they knew that their axes were being labelled and disseminated in a more granular and smarter fashion. If you start labelling types of liquidity that are out there it offers more confidence and clarity around how to engage with that,” says Poole.

“The onus is on us to ensure that we’ve got the right data feeds, the right opportunities to access the liquidity when the time is right and the price is right in a marketplace where we are frankly at the mercy of a number of participants who are far less price sensitive. That’s why you’ve got to be careful because once you reveal that you might be a buyer then the likelihood is there will be an algo out there able to buy ahead of you.”

A way off from market making 

Buy-side shops can iceberg orders via external venues such as Bloomberg’s AllQ platform – which shows dealer-contributed prices in real time for bonds – via the UBS Bond Port solution. However, whether or not the market is able or willing to evolve to allow buy-side firms to quote directly onto said platforms remains to be seen.

“I’m not sure necessarily that the market would take that well,” says head of trading, fixed income EMEA, at Liquidnet, David Everson. “That’s not to say there aren’t places where buy-side can make their own pricing and stick a firm order out there for people to see.”

Due to a limited handful of offerings such as Liquidnet’s new issue trading platform, buy-side use of central limit order books in fixed income remains incredibly low. Contingent on liquidity, some quantitative and proprietary trading firms use them for the Treasury markets. However, the process of trying to get hit or lifted on bids and asks doesn’t match the majority of traditional long only firms’ business models.

While buy-side firms are not yet in the business of ‘market making’ as such, they are increasingly taking matters into their own hands when it comes to pricing using their desired methods. With new tools becoming available all the time, the buy-side are no longer limited by the traditional methods of making prices and sourcing liquidity, and they know it. As data access ramps up, this autonomy is only set to follow suit as the prospect of a widely adopted order book for more transparent fixed income instruments becomes a reality.

“It’s not beyond the realms of possibility to get to a point where there’s an on the run investment grade order book where the buy-side can leave orders up. It’s no different to leaving something on AllQ currently with UBS Bond Port or leaving something on Open Trading at a level,” says Poole. 

“In the next 12 to 18 months, some of the more on the run credit space could be ripe for that sort of trading. Quasi order book, small size, executable, click to trade, the algos will get smarter quickly. The technology will allow for it and then it’ll be down to confidence in the data.”

The post The changing role of the buy-side in fixed income price making appeared first on The TRADE.

Do you think trading desks are challenging themselves enough in the talent recruitment process? Why?

Clearly there continues to be challenges in terms of achieving the right level of diverse talent on trading desks across the industry. I don’t think that is up for debate anymore. We are all agreed that diversity of thought and diversity of background lead to better outcomes.

There does need to be focus from the trading desk in their recruitment process, but it’s tough to put it all on them. In an environment of volatile markets and cost pressures from all directions, how much can they do?

The head of desk needs to be held to account on approach and process but is an issue for the broader organisation. It’s a collective responsibility. Often there is pressure to get someone in quickly and a person who can hit the ground running. A firm needs to be willing for it to take longer and to take risks on people with different backgrounds and different experience. 

How do you think they could better challenge themselves?

I think we all need to try a bit harder and be a little less risk averse when it comes to looking in different places and taking chances on who we find.

And then once we have hired them, how do we keep them? Role modelling, sponsoring, and mentoring are key. You have to make space for people and support and nurture them.

How has the evolution of trading evolved the desired skillset in a trader from a recruitment perspective?

Our industry is one of constant change. From technology innovation to market dynamics to regulation, the only guarantee is that next year will be different to this one. The most important ability is a willingness to adapt and change. To be successful and at the top of your game, you need a questioning, data driven, decision making mindset.

You don’t need a coder per se – if you’re trading high touch, high yield EM, python isn’t going to get you liquidity. While data and tech utilisation are incredibly important in trading nowadays, it is still a relationship business where the key skill is engaging with people. When you see market dislocation like we have recently, lots of business switches back to high touch. However, you need to able to leverage all the information at your disposal, analyse it and use the output to reinforce or challenge your decision making.

How has the recruitment process adapted to capture individuals with this changing skillset?

Broadening out where we look for talent. We need to make our industry more attractive and accessible. Try and attract people with different backgrounds, and the younger generation who are by circumstance naturally more tech savvy and adaptable.

Initiatives like Investment2020 and ReturnHub who we work with at Jupiter, graduate schemes, apprenticeships, etc., all provide access to different groups of potential talent, and time on the desk. Hands-on experience of the exciting and fulfilling jobs that are available [is also important].

At a firm level we are focusing on financial literacy. We are connecting with potential populations early in their education or career and giving access to people who might not have experience or knowledge of asset management.

The post Alison Hollingshead: We need to make our industry more attractive and more accesible appeared first on The TRADE.

Jupiter Asset Management, the London-based, LSE-listed investment manager with assets under management of around £47.4 billion, recently promoted former head of fixed income Mike Poole to run its trading desk. He sits down with The TRADE to discuss his career to date, his strong feelings about the future of trading – and the direction in which he’d like to steer the firm he has called home for the past 17.5 years.  

Learning the ropes 

Poole joined Jupiter back in March 2005 as a lowly dealing desk assistant. “We’d just taken on our OMS for the first time, so it wasn’t quite paper tickets, but we weren’t far off.”  

His job was to help the equity traders sort out queries, listen in on phone calls, and assist them with the organisation of elements such as IPOs and secondary offerings. “We used to have a big white board in the office, and I would put up all the information to make sure the fund managers could see. A collaborative effort has always been a big part of the trading floor here, and my job was to grease those wheels.” 

“When it comes to trading, you listen in, you learn how it goes, and you learn the etiquette. That’s the key thing about a place like Jupiter – it’s all about the etiquette.”

He saw quickly that the two-way communication between traders and fund managers was vital, and as a desk junior without any real execution experience, just wanted to take it all in. “It was information by osmosis. When it comes to trading, you listen in, you learn how it goes, and you learn the etiquette. That’s the key thing about a place like Jupiter – it’s all about the etiquette. How you’re seen, not just by internal stakeholders like fund managers, risk, compliance, but by external parties:  sell-side, brokers, ultimately clients. For example, speaking to a counterparty and taking them short $5 million-worth of risk, and then calling another counterparty because you know they’ll short you the same security, and then doing that again and again, and everyone is trying to cover the same stock – you’ll get a pretty bad reputation quite quickly in terms of how you engage with risk provision and balance sheet. It goes back to partnerships. If someone has shown you something, or you’ve sold them some risk, allow them to get out of that. Understand the market. I learned very quickly how to get a good feel for how our traders did good business, and that is something that has continued throughout my career.”  

Poole started off by helping his fund managers set up program trades and found those discussions with the PMs notably helpful in terms of understanding portfolio construction: “What it is fund managers look at, why they look at it, what they expect from us, and how we can deliver it in terms of value.” 

Jupiter also used to have quite a significant private client business, and Poole did much of the trading for that, ranging from very large stocks to AIM-listed micro caps, which was a good way to learn the ropes of pre-Mifid 1 market structure.  

“Liquidity was probably more abundant, but in those spaces you really had to understand who was doing what, and why they might be positioned like that. I spent a lot of time on the phone, to be honest, really getting a feel for the market, and that stood me in good stead for the next step in my career progression.” 

Credit crunch 

But then the financial crisis hit. Program trades dropped off, because people weren’t trading risk. Private clients weren’t trading as much, because there wasn’t as much to trade with, and an opportunity came up on the fixed income side, just as the firm was starting to make inroads into the credit space. 
“I thought about it for all of five seconds,” he says. “It was great to add another string to my bow – at that time Jupiter were really starting to push the fixed income product, so it was exciting to be on that journey. I was basically given a book about yields and convertible Greeks and told to go on holiday for a couple of weeks and learn it, and when I came back I was good to go. It’s a great way to learn. There’s nothing wrong with being dropped in the deep end, as long as you have the right support network.”

“There’s nothing wrong with being dropped in the deep end, as long as you have the right support network.” 

Initially there was just Poole and one other guy in the fixed income division – so the learning curve was steep. “I did take it upon myself to adopt more of a leadership role,” he admits. “Just because I could see that the industry was changing. Fixed income is always undergoing change. But at the time we were still doing things very manually, very slowly. That was fine, but we were only trading a small number of bonds.” 

Bull run 

The uptick really came with the arrival of Ariel Bezalel in 1998, who became a fixed income fund manager in 2000 and who kickstarted Jupiter’s credit success. Heading up the global flexible bond strategy, he manages the Jupiter Strategic Bond Fund – which has returned 110.67% since its launch in 2008 – alongside the Dynamic Bond Fund, with AUM totalling £10 billion. 

“The fund grew very quickly, the strategy was very successful, and before you knew it, we’d reached a few billion and we needed to onboard the likes of Tradeweb, Market Axess, Liquidnet, and look at different ways of executing, of accessing the market in a more efficient manner,” explains Poole. “This is a crucial point that I’ll come back to again and again. Giving the traders the tools to make the right decisions.” 

From 2011/12 onwards, electronification of fixed income started to become more prevalent, as did the use of data to access new parts of the market. As time went on, 2014/15 saw the advent of open trading. All-to-all became the hot topic, and Poole has always been a big advocate of accessing new counterparties. “Jupiter doesn’t really have the scope to broaden out its remit to 25 local LatAm brokers,” he admits. “So it was handy to have access to different pools of liquidity by utilising these platforms. In doing so, we then had capacity to hire additional traders.” 

Then in 2017, Poole was made manager of the fixed income team – and that’s when things started to get interesting.  

Leading by example 

“I felt empowered to bring more change in,” he explains.  

“I think I’m more of a carrot than a stick person. I want my team members to come on the journey with me. I don’t want to tell them how to do things. Buy-side traders don’t like being told what to do. They do like the idea of trying something that works, and then doing it again. My job is to encourage them to try something new. If it works, let’s go with it. If it doesn’t, let’s figure out why.” 

Poole is a fan of the film Inception, and he likes the idea of planting the seeds, the ideas, in people’s heads, and then watching them grow. “That slow dawning that perhaps technology can help you, that perhaps automation isn’t turkeys voting for Christmas,” he illustrates.  

“Buy-side traders don’t like being told what to do. They do like the idea of trying something that works, and then doing it again.”

“I believe in leadership that empowers members of staff to do new things, who are willing to learn. What happens if you make a mistake?  We have a very open and collaborative process around that. If there’s an error, or something we call a ‘near miss’, it gets logged in the system and we look at why it happened and how we can fix it. It’s very much a process, and it’s something that I very much encourage within the team. If anyone sees a gap in the process, I want to move away from the ‘oh, it’s always been done like that’ mindset towards ‘why is it done like that, and how can we do it better?’ That is what I see as my remit – to ensure that processes are as efficient and as streamlined as they can be.  

“I don’t look at things on a trade-by-trade basis, or ever want to say to a trader: you did a bad job. I want to look at trend analysis and understand why they’re making that decision over time, to trade that stock or that bond. Because if it’s sub-optimal, then we need to look at the decision-making process, and then determine whether they’ve got the right tools to access the market. Have they got the equipment to make that decision, or are they doing it just because it worked once, so they try it again.” 

Wag the tail, not the dog 

But there are shades of grey – and for Poole, automation is a monochrome rainbow.  

“Automation,” he muses. “There is undoubtedly a place for automation in fixed income. But automation is very dependent on how you execute your firm’s book of business. Jupiter is entirely active. Every fund manager lives or dies by their decisions, and by their alpha-generating capability. I see the trading desk as being part of alpha retention. If automation allows us to make our workflow more efficient, which means we can focus more on those alpha generative trades where we can actively add value, then I’m all for it.  

“What I’m not in agreement with, is using automation for the sake of it. I’m not in agreement with technology changing your process. I think you should use technology to make incremental gains and incremental improvements upon your existing process.  

“Not all trades are right for automation. I’ve never been a fan of the bifurcation of high touch and low touch. Every order should be treated on its own merits, and we don’t do any no-touch trading at all. The important factor is to have all the tools to achieve the best outcome on an individual trade basis.” 

But not all asset classes are equal, and what works for equities might not work for fixed income. “In the credit space, it’s slightly different,” explains Poole. “We don’t run any passive books, or any trackers. We don’t have a price-agnostic part of the business, and we don’t have to buy and sell things. We have no house view at Jupiter, that’s important – there’s no CIO telling the investment managers what to do. They make the decisions, and our job is to achieve their investment goal as efficiently and as cheaply as possible. If automation assists in that journey, then great. But if it doesn’t, then it shouldn’t be lauded for its own sake.”  

Climbing the Poole 

From managing the fixed income team, which is currently up to three, in November 2022 Poole was promoted to the overall head of trading for Jupiter – and for him, it’s been a natural progression.  

“I’ve always steered away from pure specialisation,” he says. “I think it’s important to have an understanding of all markets. Heading up the fixed income team was my first time as a people manager, and I think it’s important to recognise the value that each person adds. Each of my traders has an area they lean towards, but I encourage them to maintain the ability to work cross-market, and I think we’ve built up a pretty seamless desk in that regard. 

“In addition, I think that in some firms, the trading desk can be viewed as an operational cost centre. And we offer a lot more than that. We offer the ability to be part of the investment process – I’m not suggesting we’re coming up with ideas, but I want to empower my traders to be able to go to their investment managers and say – this might not be the right thing to buy right now. The liquidity profile, the positioning in the Street… We have a huge amount of information, we’re at the coalface getting our hands dirty every day. We should be able to turn round to them and say, with a high degree of confidence, that we have information that can assist their investment decisions.” 

When Poole was offered the head of trading role, however, he had to think about it rather more carefully. “It was a very exciting opportunity,” he agrees. “It was the chance to take on equity and FX as well as fixed income. It’s a shame that the opportunity came about because of headcount reduction, but I think it’s a chance for some areas of the trading desk to take a step back and reassess their use of technology and of data. 

“I’d like to get those parts of the desk to shout louder about how good they are. The average tenure of a trader at Jupiter is about 15-20 years. They are very experienced, they know the market very well. It goes back to etiquette; I think we are well-liked by the sell-side and the way we go about doing business – I hope – encourages people to want to do business with us.”  

Retaining relationships 

Coming full circle, Poole still believes – as he did at the start of his career (and the start of this article) that relationships are crucial.  

“Despite the onset of electronification, trading systems, data-driven decision-making, I’m still a firm believer that it’s a people-led business. Given the nature of our business, which can be very OTC and very esoteric in terms of what we’re looking at, you do require a degree of trust, and understanding between yourselves and your partners. They’re helping you to achieve your investment goal for your client, and that’s what we try to build upon.  

“In every engagement that we have with a sell-side partner, it’s a case of us really trying to ensure that it suits both parties. We have a number of electronic routes into the market, and yes those are important, but retaining and developing these relationships is almost more important than it was four or five years ago.  

“Despite the onset of electronification, trading systems, data-driven decision-making, I’m still a firm believer that it’s a people-led business.”

The Covid curse 

“I think Covid has led to a lot of people losing that element, and not realising quickly enough the value in facetime, the value in developing relationships and in-person. I think people got a bit lazy during Covid – be it meeting people, be it trading – I think people hid behind the electronification of fixed income. We certainly saw a spike in the volumes done electronically, and that then led to a difficulty in trading blocks. We’re now coming out of Covid, and people are starting to have those in-person conversations about how we can get balance sheet and risk provision from our Tier 1 counterparties.  

“The primary markets have really dried up this year, and a lot of people use the primary markets as a liquidity tool. So if you want to get a block done, and access some risk, then you need to have trust and you need to have that relationship. That will have been eroded over time if all you’ve been doing is putting them in competition with each other. If you’re going out every time with $2-5 million and putting everyone up against each other for every trade, there is an element of winner’s curse there. If you win, everyone else knows you’ve won.  

“They might not know who it is, but they’ll know someone has taken on $5 million-worth of risk. They can then position themselves accordingly, and you are off-side very quickly. The banks don’t like that, they would like more bilateral trading, and a lot of that comes with trust. The banks don’t have a lot of balance sheet to provide necessarily to every client, they have to pick and choose. It’s important, as a non-trillion dollar asset manager, that we seek to strengthen those relationships.” 

Ringing the bells 

So where next for Jupiter, with Poole at the helm?  

“There are some immediate changes I think can be implemented,” he reveals. “We currently have a cash management element to our trading desk – I would like that to become more dynamic, and more value-accretive: more cash trading as opposed to oversight of cash positions and collateral. 

“I’d also like to use technology more strategically. At the moment we use BlackRock Aladdin as our OMS, so we’re going to be partnering up with them a lot more to try and standardise views across the investment floor when it comes to how people look at cash positions especially. Data is only ever as good as understanding what you’re looking at – if everyone’s looking at a different view then when something goes wrong, you spend the first hour trying to work out what you’re looking at.  

“A reluctance to change can be an issue, and we on the buy-side often get tarred with the same brush. It can be difficult to move the needle.”

“A reluctance to change can be an issue, and we on the buy-side often get tarred with the same brush. It can be difficult to move the needle, although as an industry, I do think that (especially on the buy-side), we are more collaborative than ever. But within the four walls that constitute Jupiter Asset Management, my views are very clear. We should be looking at how we use data, we should be looking at how we use the platforms at our disposal, and how we can better utilise the technology that we pay for. We should be more vocal about the demands we have of that technology.  

“If we can fix the current internal fragmentation around disparate datasets and technology usage, I think we’ll be in a far stronger position to achieve the goals that I have in mind: which are to help the trading desk utilise their experience and skillset in order to add to the investment process, as opposed to feeling like they are fire-fighting. 

“By this time next year, I’d like every trader to feel comfortable using a dataset in order to tell a story about what they’ve traded and why. We’re quite a quiet trading desk, which is fine at times, but I’d like us to be more proactive. I want us to be able to tell our investment managers what we’ve done, why we’ve done it, and use the data to illustrate that. Then we’ll be able to demonstrate our value, and that’s never been more important for the buy-side. It’s on us, to show that value. 

“And that will happen, within the next year. That’s my role, and I’m looking forward to the execution.”  

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Cboe Global Markets named Iouri Saroukhanov as its new head of European derivatives. Based in London, Saroukhanov will oversee Cboe Europe Derivatives (CEDX), reporting directly to Natan Tiefenbrun, president of Cboe Europe. Saroukhanov replaces Ade Cordell, who will become president, Asia-Pacific, overseeing the business operations of Cboe Australia and Cboe Japan (formerly Chi-X Asia Pacific), alongside holding responsibility for the company’s further expansion into the region. Saroukhanov joined Cboe Global Markets from Bloomberg, where he served as equity derivatives specialist over the last six months. Prior to Bloomberg, Saroukhanov spent nearly 16 years at Liquid Capital Group, most recently as senior trader on the Euro STOXX 50 derivatives desk.

Jupiter Asset Management promoted one of its own, Mike Poole, for the role of head of trading. Poole was appointed to the position after serving at Jupiter Asset Management for nearly 18 years. Originally joining Jupiter in 2005 as a dealer, he later moved to the newly created centralised fixed income dealing desk in 2010 to start trading high yield, investment grade, fins, rates, convertible bonds, government bond futures and FX. He was promoted to his most recent role as head of fixed income dealing in 2017. Prior to joining Jupiter in 2005, Poole spent a year at Barclays Wealth as a portfolio manager.

Former senior abrdn dealer, Matthew Drake, joined UBS Asset Management as an equity execution trader, based in London. He joined the asset manager after spending the last 16 and a half years at abrdn, joining in 2006 as a portfolio analyst for pan-European equities and later becoming an equity dealer in 2008.

Numis Securities appointed James Crammond as a member of its electronic sales and trading team, headed by Nishad Vallonthaiel. Crammond joined the firm from Olivetree Group, where he served as a sales trader for the past year. Before that, he held the same role at Louis Capital Markets UK. Previously in his career, Crammond spent seven years at Liquidnet Europe as an algorithmic trader. In addition, he spent nearly 10 years at HSBC as head of its financial sector. Other previous roles include serving as portfolio manager at Apex Capital Markets, and head of equity trading at BGC Partners.

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Mike Poole has been appointed to the position after serving at Jupiter Asset Management for nearly 18 years.

Originally joining Jupiter in 2005 as a dealer. He later moved to the newly created centralised fixed income dealing desk in 2010 to start trading high yield, investment grade, fins, rates, convertible bonds, government bond futures and FX.

He was promoted to his most recent role as head of fixed income dealing in 2017. Prior to joining Jupiter in 2005, Poole spent a year at Barclays Wealth as a portfolio manager.

“We are very pleased that Mike has taken on the role as our new Head of Trading,” Alison Hollingshead, Jupiter’s chief operating officer told The TRADE. “Mike has extensive experience trading for Jupiter across multiple asset classes and I am looking forward to working closely with him to deliver an excellent trading experience for our investment teams, proactively adding value using a tech and data-led toolkit.”

Speaking in an Oxford-style debate at the Fixed Income Leaders Summit in October, Poole claimed it was time to overhaul the way the buy-side pay for balance sheet.

“Our ability to ascertain how much we pay can be curtailed by the nature of trading. Opportunity costs in a fragmented marketplace has been a silent killer of investment returns for years,” he said. “We can’t get rid of opportunity costs but enhancing conversations with post-trade analysis and understanding of costs is vital as we approach new transparency in fixed income. We have a fiduciary duty to shine a light on how much we’re paying for a balance sheet.”

Instead, he suggested replacing the current regime with paying commission on a trade-by-trade basis or through a flat monthly fee.

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Before each side was invited to speak, an initial poll of the audience found that 79% of those who voted were in favour of change, while 21% said they were happy with the status quo.

All in favour

Arguing in favour of a change to the current regime was Jupiter Asset Management’s head of dealing, Mike Poole, who said traders were bleeding alpha and it was time for a “grown up conversation” around costs, particularly when an order cannot be filled.

“Our ability to ascertain how much we pay can be curtailed by the nature of trading. Opportunity costs in a fragmented marketplace has been a silent killer of investment returns for years,” said Poole.

“We can’t get rid of opportunity costs but enhancing conversations with post-trade analysis and understanding of costs is vital as we approach new transparency in fixed income. We have a fiduciary duty to shine a light on how much we’re paying for a balance sheet.”

Instead, he suggested replacing the current “sporadic” regime with a “liquidity tree that can remain standing in the storm” perhaps in the form of paying commission on a trade-by-trade basis or through a flat monthly fee.

The case against

Opposing Poole was director and head of G7 portfolio management at EBRD Treasury, Jasper Livingsmith, whose argument was simple.

“As a price taker we have no say over the cost of balance sheet. It’s too late. The ship has sailed and there are other things we can do to mitigate cost,” he said. “We’ve been discussing for many years how to challenge this but we’ve come to accept there’s not much you can do.”

Instead, he claimed that with the ground constantly shifting in today’s market and with banks being such complex institutions, any change to this system was unachievable.

“Banks are wanton havens of complexity. It’s very hard to have clarity when banks themselves do not know,” he said. “Quite often there’s a structural reason for alpha being unattainable.”

A second audience poll done at the end of the debate found that Livingsmith had gained a large portion of ground, with the split now closer to 45% and 55% in favour of Livingsmith’s position.

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Alison Hollingshead joins the asset manager as its new chief operating officer for its investment management division after 18 years at Man Group, most recently serving for the last three years as its chief of staff for its trading platform and core technology.

Across her tenure she has operated in a number of roles including head of transformation, head of investment management services, business risk and strategy manager and as an equity trader.

“We are very pleased to welcome Alison Hollingshead as the new Chief Operating Officer (COO) for our Investment Management department.

“Alison is a deeply experienced asset management expert with over 20 years’ experience across multiple asset classes, fund structures and jurisdictions,” Matt Beesley, chief investment officer at Jupiter, told The TRADE.

“I look forward to working closely with her to deliver an investment management infrastructure best suited to supporting our clients’ evolving needs.”

Man Group declined to comment on the move.

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Despite increased adoption of low-touch protocols and algorithmic trading in global fixed income markets, bond trading will still need the human touch for large trades and during times of market stress, according to senior buy-siders.

Making the case to delegates as part of an Oxford-style debate at the Fixed Income Leaders Summit Europe conference in Barcelona, two heads of fixed income dealing acknowledged that bond trading will continue to evolve with technology, but the human trader and human relationships will remain a key part of trading fixed income.

“Bond trading will continue to evolve with more data and as new tools to execute trades are introduced to the market, but my problem is how do I transact a block trade during times of high volatility or in an inefficient market,” said Mike Poole, head of fixed income dealing at Jupiter Asset Management.

“Low-touch and algo-driven trading will not work across the board in fixed income. As market participants, we have the ability and duty to ensure the market evolves in a way that allows a number of trading protocols to flourish, including human trading protocols for large transactions that can be executed in a variety of market conditions. My fear is that reliance on a small number of trading techniques will erode relationships that we have built up over decades. Change for the sake of change does not always equal progress.”

Poole continued that while the human element is important, there must be more efficient processes to evolve those human relationships, not algorithmic trading, because it’s the human trader that gets those blocks done and that’s how risk is cleared. David Walker, head of fixed income dealing at M&G Investments agreed with Poole, adding that as many fixed income divisions are scaling back the trading desk, he has been adding traders that are specialised in certain products to the fixed income trading team.

“I’m upscaling my dealing desk with specialised dealers so that they have time to speak to the street and share ideas with the portfolio manager. Sure, electronic trading is efficient and protocols like portfolio trading are good, but I’ve looked at portfolio trading closely and found that the result was not always as good as when we’ve traded those bonds ourselves… Electronification in fixed income has leveled off, and the evolution is over.”

On the other side of the argument, Brett Olson, head of fixed income execution at BlackRock iShares, and Bart Smith, co-head of the ETF Group at Susquehanna International Group, declared that the trend towards the electronification of fixed income trading will, in fact, continue.

“ETFs have kicked off this process,” Olson said. “Dealers have had to rapidly price and trade baskets of bonds and they are evolving with advancements in technology and platforms in mind to facilitate that shift. Not only do I believe bond trading is evolving more towards low-touch, I know it is.”

Similarly, Smith noted that it’s uncommon to hear asset managers asking how they can get more out of high-touch trading relationships, but market participants are increasingly looking to low-touch trading protocols to facilitate more difficult trades.

“This has already happened,” Smith said. “Regulatory pressures have limited the ability for banks to hold inventory and the buy-side have their own regulatory pressures to contend with. Transparency and best execution lend themselves to increased use of technology and low-touch trading solutions.

“Low-cost and low-touch trading continues to put pressure on areas of the market that are inefficient, and eventually that will happen as we see new market entrants and technological innovation. It’s [high-touch trading] just not economically viable anymore. It will continue to migrate upstream. We love human beings, but the ‘equitisation’ of fixed income has well and truly begun.”

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