At the helm of the team is global head of trading Cathy Gibson who oversees trading across the asset manager’s offices in London, the US, Asia Pacific and South Africa. Gibson is a seasoned trader with an extensive career in markets. She joined Ninety One in 2021 from Royal London Asset Management where she had been head of dealing for three years. 

Previously in her career, she spent two and a half years as head of fixed income trading for UK asset management at Deutsche Asset Management [now DWS] and nearly five years at Pioneer Investments as a senior fixed income dealer. She began her career with a two-year stint as a principal dealer at Bank of Ireland Global Markets. 

In her more recent roles however, Gibson has stepped away from the markets and instead refocused her attentions on leading and developing her global team. Having a cohesive team globally has proved an increasingly essential tool for institutions in light of the ongoing globalisation of finance and the turbulence caused by market events in the last few years. 

Varied approaches to the Covid-19 pandemic starting in 2020 paired with the subsequently varied approaches central banks have taken to abate the economic fallout has left traders, in particular those in the emerging and frontier fixed income space, more reliant on their relationships than ever, both internally and externally. 

“Markets have been tricky. Show me a time when they haven’t,” asserts Gibson. “Markets are constantly challenging and that’s the key aspect to our role.”

For Gibson, the key to an effective team is autonomy and each individual trader feeling a sense of ownership to their day-to-day activities. 

“When people have ownership in their function and they can see their contribution to the business, that really motivates them to make sure that they are constantly improving,” she explains. “In general, my experience is that people don’t like change being done on to them, but they have no problem being part of it and driving it.”

Ninety One’s trading team consists of 17 globally with six – soon to be seven – based in London. The firm also has trading hubs in New York, Hong Kong and Cape Town. Given the wide breadth of products that they cover, the team leverage each other day-to-day to understand how the markets are ticking over. 

“When we see an inflow and notice that some of that cash has been deployed in Asian markets earlier in the day, it gives us insight into market liquidity,” says trader Ed Wood. “There’s often a connection between the markets they trade and those we handle here in London. This can provide valuable perspective, such as when duration is heavily bid, it might mean certain bonds are difficult to source for us.” 

Wood joined Ninety One in 2021 after serving for a year and a half at Aviva Investors as a credit trader and for five years at Vanguard as a fixed income trader. Wood now trades the credit side of things at Ninety One across regions and also supports the local rates and FX traders on the desk. 

For him, it is the correlation between real world events and the markets that drew him to his role in finance in the first place. The changing stance of the US Federal Reserve when it comes to interest rates and the looming election, paired with the Bank of Japan’s decision to raise rates, is just one topic that has kept traders busy as of late. 

“It’s impossible to be involved in the markets without paying attention to developments in the US. However, Japan’s current situation is particularly significant, as they’re [The Bank of Japan] one of the few central banks raising rates while others are cutting,” says Wood. 

“This has broad implications, as demonstrated recently when the Nikkei dropped over 12% in a single trading session, affecting volatility and liquidity for weeks. This context is crucial for our day-to-day operations. If a portfolio manager wants to execute a trade days after such an event, they need to understand that liquidity may be reduced, and they must be confident in their strategy if they’re willing to pay more in the bid-offer spread.”

One of the newer members to the Ninety One team is Liam Hagan – formerly recognised as one of The TRADE’s Rising Stars of Trading and Execution in 2023. In the same year, Hagan joined Ninety One from Amundi where he had been serving as an FX trader for almost four years. He now trades foreign exchange for the G10 and emerging markets, while acting as a backup for the emerging markets fixed income traders when necessary.

“You’re looking at news headlines and the news flow really matters and can have massive ramifications on the day to day workflow in FX,” he explains. “Oftentimes your family sees the six o’clock headlines, and they ask have you heard about this? and you say yeah I’ve been living that over the course of the last eight to 10 hours.” 

Previously in his career, Hagan also spent four years on the sell-side at Société Générale in various FX sales roles. He moved to the buy-side in 2019 for a change of pace, looking to be more holistic in his approach to execution. 

“The sell-side tends to operate on a 24-hour basis,” he adds. “And what happens in one 24-hour period doesn’t necessarily have a bearing on the 24-hour periods either prior or post, which can be a little bit frustrating at times because you are somewhat chasing the narrative, whereas on the buy-side, your approach becomes much more long dated and holistic.”

The frontier

Ninety One specialises in trading the emerging and frontier markets, an area of expertise that brings with it a layer cake of nuance that the team must incorporate into their day-to-day workflows. Frontier markets are more established than LDCs [least developed markets] but are less established than the emerging markets. They’re newer in terms of access to capital but less developed in terms of how feasible it is to get into them.

It means workflows aren’t always as straightforward, explains emerging markets trader Richard Willis. Willis is one of the longer serving members of the trading team in London. In nothing short of a baptism of fire, he took his first steps into trading in January 2007 in the build-up to the global financial crisis. 

“Historically, investment banking and trading was fairly wild and there was a lack of control generally in terms of the way banks managed traders, P&L and risk,” he adds. “Post the GFC [global financial crisis] things have changed 180 degrees in terms of regulation and compliance regimes.”

Starting his career at Absa Capital on the Africa trading desk, Willis explains that as a junior market maker he was given a book of business – Nigerian and Ugandan bonds among other things – and told to face off against seasoned asset managers and peers. 

“Working at a bank, on a market making trading desk is arguably one of the most fun, but also one of the most stressful roles you can play,” he says. “You’ve got competing market makers that you are up against. You’re also going against very sophisticated investors who are no longer naïve. For example, if they look at a country like Poland, the buy-side research analysts and portfolio managers are analysing the nuances of each of these bond curves, so they’re probably know things a lot of time better than the sell-side trader.”

He moved to the buy-side and his current role at Ninety One in 2016 after five years at Barclays in an emerging markets trading role. He explains that he left the sell-side for a change of pace but that his experience there has proved useful in his current seat.

“What they [Ninety One] liked is that someone from the so-called ‘dark side’ was coming to join them to hopefully protect them from the advantages that the banks do try to take on the naïve in these frontier markets,” he says.

He now trades emerging markets bonds, credit default swaps (CDS), interest rate swaps (IRS) and foreign exchange.

When asked what key trends the emerging and frontier markets have seen as of late, Willis explains that there have been several substantial but necessary devaluations in national currencies to encourage foreign interest in markets such as Nigeria and Egypt. 

“You’ve seen it a few times in the history of their respective financial markets, the need for fairly substantial devaluations,” he explains. “We’re talking circa 50% in both their currencies this year. The cheapening in the local currency and the local assets, attracts offshore investment which is crucial for the long-term development of these countries.”

Subtleties and nuances

The nature of the frontier and emerging markets lend themselves to more off-the-beaten-track workflows. Given the liquidity landscape can often be more sparse or difficult to navigate, the use of local brokers alongside the bulge brackets is something Willis thinks is essential to minimise market footprint. Due to lower demand, bulge brackets will sometimes not cater for the particulars of what frontier traders are looking to execute. 

“Say a large real money account wants to buy South African Government Bonds at the same time as us because of the positive sentiments there post the elections, I know the logical approach is to go to a bulge bracket US investment bank because it’s easiest means. But sometimes you want to go to the road less trodden, and that’s when you make use of local brokers,” he says. “My preference typically is to go under the radar of the bulge bracket banks and to make use of smaller regional banks that access to domestic clients.”

Market nuances also mean the trading team at Ninety One are more voice driven and focused on relationships-based trading when it comes to trading FX and frontier pairs. This makes us somewhat of an outlier in comparison with the street, Hagan says.

“It’s very much about us having a picture as to whom has the ability to access the liquidity both onshore and offshore, who’s got a reliable enough franchise that they can potentially show us a risk price and then who internalise and offset the risk in a manner that’s not detrimental to either us or the wider market,” he says.

Data is therefore even more essential. On the FX side, Hagan confirms that using multiple single dealer platforms from a data perspective is usually a good strategy as teams can gain access to a better picture of market whether that be volumes in sector flows, revaluations country-by-country or real-time flight data around liquidity available either above the offer or below the bid.

“What we focus on be at the EM currencies and the frontier currencies, particularly like Nigeria, Egypt, Ghana, Kenya, these are markets that are very fragile, illiquid, and sometimes unobservable, even in Bloomberg,” he explains. “It can be very difficult to work out the quality of data sources. Who is saying they’re good five by five but is actually only good in one by one, and who has the ability to take down larger risk and partner with us on the larger trade in order to minimise the information leakage and then the subsequent market footprint that we see on our trades.

“There’s a pressing need to interpret data sources in so far as working out what’s reliable, how big offers or bids are available in as opposed to G10 focus, which is much more liquid and more commodifiable and increasing the electronic. It’s definitely a seat that leans more towards the high touch approach certainly from an FX perspective.”

It’s because of these subtleties and the firm’s global remit that global head of trading Gibson confirms outsourcing any or all of the trading desk’s functionality is not likely to be on the cards any time soon.

“If I saw a value of an opportunity in terms of part of the book of business being outsourced I would have to consider it. However, I genuinely just don’t see how outsourced sourcing trading is actually going to lead to better outcomes for the investors,” she explains. “If you outsource your trading, and my trade gets stuck behind a queue of somebody else who’s already been trading it or lumped in with another big block because someone else is trading it there’s no way the client gets a better outcome.

“Ultimately, while I can see the user case for smaller asset managers with more limited trading hours, for a manager of our size with our capabilities, I just can’t see an outsource function coming anywhere close to the execution standards we can achieve for our clients.”

Equities equities equities

Sitting in the European equities seat at Ninety One is Damion Kumarasinghe. Like Willis, his career was forged during testing times. He took his first role at Cofunds in 2000 “just to the tail end of the dotcom bubble bursting” as he puts it. He moved to Investec Asset Management – now Ninety One – in 2004 in an operations role before moving onto the dealing desk covering money markets and some FX in 2007 just in time for the global financial crisis.

“It was really interesting to see how that crisis [global financial crisis] started to emerge in money markets as rates started spiking before it really fully fed through to the other markets. Those were incredibly tough times, with long, exhausting days. It was an intense experience—one I’m glad to have lived through, though I wouldn’t want to repeat it,” he says. 

“Each day brought uncertainty about whether our counterparties would be around the next. We were frequently forced to suspend relationships as they teetered on the brink of collapse. It was a chaotic period – banks were reporting record trading days, but for all the wrong reasons. Volumes were huge, but the market was unravelling.”

Kumarasinghe then moved into an equities seat. The desk was a lot smaller then and so oftentimes he would be covering the US and Asia out of London. Market dynamics in Europe are heading in the same direction as the US, he tells The TRADE.

“Larger block liquidity is still very tough to find. You can get volume on screen, but you can sometimes struggle to find the more substantial block liquidity,” he says. “My concern would be that traders are getting more comfortable just trading throughout the day in small size and are reluctant to commit to larger blocks, especially if they cannot be confident that they are seeing all of the prints going through the market. I’m hoping that the consolidated tape helps with that to some degree.

“It [finding liquidity] varies from situation to situation. Often we won’t commit orders fully to a broker. We’ll always keep some on the side just in case any liquidity emerges and we have to be quick move on that liquidity if it appears. We may be working an order with a broker and then we see that we’re not really capturing the volume that’s going through the market and we see it going elsewhere, so we have to be prepared to move our order if needs be.”

With the addition of Sam Spencer who took over trading US equities, Kumarasinghe now only covers Europe. Unsurprisingly, fragmentation – something that has become a poster child for rhetoric surrounding the region – is often front of his mind. Europe, with its 27 member states each with their own venues and players, is naturally more fragmented than the US or Asia. And, as Kumarasinghe notes, new entrants looking to launch platforms and venues in the region must be mindful of their role in exacerbating this. 

“It’s a bit disheartening when a new entrant appears without providing any differentiating USP,” he says. “We need to have access to those liquidity sources so once they’re established, we’re going to use them in an all likelihood, but it just makes our job a little bit harder and sometimes fragments liquidity further. 

“There are always new entrants looking to come into the market, new intermediaries trying to insert themselves into the workflow. Sometimes that doesn’t necessarily leave us with a better endpoint. It can result in more fragmentation in the market as well as additional layers of fees. There’s a point where you definitely get diminishing returns.”

Technology wish lists

That being said there remain some areas where the traders at Ninety One are hoping to see some innovation. For Wood, the most important future development is seeing frequently used tools such as e-trading or list trading extend into into more niche areas of the market such as loans, CLOs or swaps where flow is still transacted bilaterally. 

“There’s a noticeable gap between widely traded products and niche markets that haven’t been as effectively addressed,” he says. 

“Technology platforms and banks need to see profitability to continue supporting and advancing those markets. Many banks will prioritise decisions that drive market growth if they see a financial benefit. We’ve seen this with new issuance automation and electronification, which still haven’t reached the desired level of efficiency.”

The traders at Ninety One, both in London and in their offices around the world, have a cohesive and collaborative approach to executing in the markets. The markets have by no means been easy for the last few years but as Gibson says, when have they ever? 

“Traders by nature enjoy a challenge. That’s their reason to be. Getting best client outcomes, chasing the best price, finding the best liquidity, the real value add is in those difficult situations and that’s where people get a sense of real and honest job satisfaction,” Gibson concludes.

Given the fact that several of the Ninety One traders have stuck around through multiple financial crises and still come back for more, it appears that may be true.

The post Trading at the frontier appeared first on The TRADE.

Citadel appointed Mukunth Raghavan head of American Treasury quants, based in New York. He joined Citadel from Goldman Sachs where he most recently served as vice president within the bank’s global equities team. In an earlier stint at Goldman, Raghavan worked as vice president, quantitative strategies within the bank’s equities prime services. Elsewhere in his career, Raghavan spent three years at McKinsey & Company, most recently serving as a management consultant.

Ninety One appointed Tina Gandhi as a trader. Gandhi joined Ninety One from Muzinich & Co where she spent nearly five years, most recently serving as an emerging markets credit trader. Prior to that, Gandhi worked as a director at Mizuho, focusing on UK real money and hedge fund credit sales. Before Mizuho, Gandhi served as a director at Societe Generale Corporate and Investment Banking, with a focus on hedge fund credit sales.

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Gandhi joins Ninety One from Muzinich & Co, where she spent nearly five years, most recently serving as an emerging markets (EM) credit trader.

Prior to that, she served as a director at Mizuho, focusing of UK real money and hedge fund credit sales.

Before Mizuho, Gandhi served as a director at Societe Generale Corporate and Investment Banking, with a focus on hedge fund credit sales.

Ninety One confirmed her appointment.

Read more: Fireside Friday with… Ninety One’s Sally Bartunek

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According to an update on social media, Nickalls will join the sell-side next month in an emerging markets credit role.

“After 11 years my time at Ninety One (and formerly Investec Asset Management) has come to an end. It has been quite the journey, joining a couple of weeks after leaving university and staying my entire career until now,” he said in an update.

“I knew almost nothing when I joined, but got my head down, and with the support of the people around me was able to move through the company and eventually land on the trading desk.”

Nickalls joined Ninety One in 2013 as a client operations analyst, moving into a portfolio implementation role in 2015 and taking up his current role as fixed income trader in 2018.

He was recognised as a Rising Star of Trading and Execution at Leaders in Trading in 2021.

The post Ninety One trader to join Morgan Stanley appeared first on The TRADE.

One topic is that US data has been surprising to the upside and the economy has remained resilient. We’re watching economic data closely because they can give indications on when the Fed could act on their rates decision. While a cut is clearly not happening at the next meeting, the stronger than expected data has caused volatility in rates, therefore filtering down to other markets that impact our investment decisions.

I trade fixed income across the credit and local markets; the daily treasury moves impact prices across the markets and can have meaningful influence on daily market sentiment. While yields have been higher for longer than anticipated – some expected cuts by now this time last year – there have been opportunities for investors.

Asset allocation is an important and timely topic. For example, there are all in yield buyers that are stepping into US investment grade (IG) where others are deeming spreads too tight for their mandates and moving to other markets. We’re watching these technical trends closely because of the effects it could have on our portfolios and execution process.

How would you describe the make-up of your desk?

We’re a global trading desk, operating 22 hours a day, six days a week with offices in London, Hong Kong, New York, and Cape Town. This allows us to have seamless worldwide coverage over the course of all market hours across regions.

At Ninety One, we are cross trained in multi-assets with individual, specialised expertise. The handoff between our desks is smooth because we underscore the importance of communication. My colleagues and I are in constant dialogue. There are times we debate the best course of action on high touch trades. In these instances, our backgrounds and experiences come together which enables us to find the best course of action to strive for best execution.

We also meet weekly as a global desk to discuss operational issues and debate process among other topics. As a unified desk, we’re able to work off one another to make the tricker situations easier.

What does the current liquidity landscape look like and how are you navigating this?

Emerging market (EM) credit liquidity is typically less predictable than US IG and high yield (HY). Much of that liquidity differential is driven by volatility and primary activity in each market. For example, we have seen an uptick in EM primary this year which in turn helped secondary liquidity. Due to heightened potential volatility surrounding the Fed and its impacts to EM, dealers have been closer to neutral on their balance sheet (i.e. more risk neutral).

While dealers do use some of their balance sheets there are subsets in the market, like LATAM corporates, that are more illiquid. As traders, we are part of the investment process from the get-go; paper trades look attractive in theory but they’re nothing if they’re not executable. From there, it’s my job to understand my investment teams’ agenda and what the urgency and willingness is from my PMs to get the risk on. This is particularly important if the market is more directional, thus making communication, again, key. There can be price discovery involved and screen levels are not always tradeable levels. If there are limits, how rigid is it or is it more dynamic as the market is fluid?

In a given situation where we have a need to unload or load on bigger than social sizes, I like to start off by looking at axes and seeing if anything suits with a reputable counterparty I have trusting interactions with. The partnership is key because I have to trust them to manage the order to minimise execution costs and price movement while also being timely should the market backdrop change. Part of the ingredients for a successful relationship is active information sharing, understanding our motive for the outcome of the trades and a mutual respect for each other’s opinions during the process.

What market structure developments are set to be most impactful throughout the remainder of this year?

The SEC’s T+1 mandate is undoubtedly the biggest topic at the moment. It has wide ranging implications across the global markets. We’ve been discussing the ramifications of the difference in settlement dates in each equity and fixed income markets. The mandate is more clearcut for equities but the issue that arises here, for global managers, is the mismatch in settle dates between different regions: what is its effect on funding and how much of a cash drag there would be on performance?

Fixed income is less clear cut in that there’s room for interpretation. The issue lies with the different settling avenues (Euroclear, Depository Trust Company or Clearstream) for a given USD denominated credit. SIFMA has now come out with a recommendation to treat US starting International Securities Identification Numbers (ISINs) as all T+1. Prior to that, it was unclear whether clients such as ourselves would subject bonds held in Euroclear to T+1 as it falls out of the SEC’s scope.

In anticipation of the change, we are taking additional steps and precautions to mitigate what we expect to be elevated fails across market participants.

The post Fireside Friday with… Ninety One’s Sally Bartunek appeared first on The TRADE.

The dominant exchange within South Africa is the Johannesburg Stock Exchange (JSE), which historically focused on equities but has now grown to cover equities, equity derivatives, foreign exchange, bonds and ETFs.

JSE’s main competitor, A2X, went live in October 2017, offering an alternative trading venue for the secondary listing and trading of shares. Elsewhere, the Cape Town Stock Exchange (CTSE) caters to small to medium -sized businesses, licensed to issue both equity and debt.

Several speakers highlighted benefits associated with increased fragmentation, particularly if a business operates globally with various trading desks located in various geographical locations.

“With Ninety One being quite global – with trading desks in Hong Kong, New York and London – we get the benefits of fragmentation and optionality when it comes to trading venues,” highlighted Yanela Songca, head of trading for South Africa at Ninety One.

“But for our clients here in South Africa, in particular, where liquidity is, that’s where we go. Sometimes we find that the pool of assets that we manage for our clients, you can’t easily tap into that liquidity and be satisfied in the local market. Referring to the process, you could only get so far in the local market, the big question is why that is?’

Songca continued to emphasise that from a buy-side perspective, a firm has to be venue agnostic in this context. He did, however, note that there are also negatives associated with this move.

“Fragmentation is great when it’s suitable and there is activity. However, being in an EM market, EM has not been favourable and we find that liquidity and liquidity providers prefer to be centred around the markets that are more developed,” he said.  

“This brings about a challenge for the players that are more specific to local markets. And even worse, it brings about a big challenge for those players on the sell-side that don’t have the technology to access those markets.

“We find ourselves in a situation where we applaud a path, but on the other side, we are cautious because it’s eating away from some of the liquidity in SA.”

Panellists noted that a lot of activity exists in South African names between foreign counterparties, which doesn’t necessarily touch the JSE lit market at all.

As a result, it is essential to think about ways that some of that liquidity can be brought back to South Africa in a way that South African buy-sides can also interact with it.  

“As a broker, I want to be able to access all of the liquidity that’s available,” argued Andries Potgieter, head of electronic trading at Investec Markets. “There needs to be [an even] playing field where everybody can do it. But at the same time, some of this liquidity is not necessarily always going to be available to everybody.”

In certain instances, panellists also noted that if you’re putting flow onto a central order book, there are predatory strategies that will still try to take advantage.  

Fragmentation was something that was presented by the panel as inevitable – developing as a result of market rigs that have been seen elsewhere in the world.  

“It’s also a case of different ways of trading, it’s more suitable to different investor objectives. There are the higher frequency market making strategies and players in that space, people who just want to get the VWAP on the exchange, but then there are the other players who have large blocks that they need to move,” added Potgieter.  

“What’s important here is that the regulatory framework, the exchanges, the buy-side, brokers, and even technologically suppliers, work together to ensure that we have a functioning ecosystem where people can access the liquidity and get the best outcomes for the clients. The world is constantly changing and evolving but we’re never going to move away from that,” he concluded.

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At number ten was a story broken by The TRADE in September, news that Cowen’s prime brokerage and outsourced trading business had been acquired by Marex just six months after TD completed its purchase of the business.

This came amidst a near-constant stream of mergers and acquisitions across both the sell- and buy-side this calendar year. Demonstrably, more and more, companies are looking to ‘fill the gaps’ in their offerings, not by growing but by incorporating those who are already primed.

The acquisition was completed earlier this month, with operations acquired set to be rebranded as Marex Prime Services and Market Outsourced Trading, with both becoming part of the Marex Capital Markets business (formed last year following the acquisition of ED&F Man Capital Markets). Following the acquisition, the business will continue to be led by Jack Seibald and Michael Rosen.

Speaking in an announcement Ian Lowitt, chief executive of Marex, said: “Mike and Jack have built a terrific business, and its addition to Marex broadens the range of essential infrastructure we provide to clients, as well as creating opportunity for Marex to provide additional services to a new set of clients. Expanding our capital markets business also adds to our diversification and to the resilience of our franchise.”

The acquisition followed an announcement in June from TD Bank Group and Cowen that the prime brokerage and outsourced trading businesses were parting ways just months after the deal was completed, seeking a more ‘strategically and geographically aligned’ partner.

TD Bank Group completed its all-cash $1.3 billion acquisition of Cowen in March – following an initial announcement in August 2022. The plan was to create an integrated North American dealer to significantly advance its growth strategy in the region, specifically through the addition of Cowen’s US equities sales trading, execution, and research offering. 

TD will continue to operate its own prime services business despite the Cowen spin-off

9. Ninety One shakes up trading leadership with new global deputy and lead for South Africa

The TRADE is renowned for its coverage of people moves, with one of the most read this year being the news that asset manager Ninety One had promoted from within for its new deputy global head of trading and head of trading for South Africa.

The TRADE revealed that former head of trading for South Africa at Ninety One, Doug Blatch, had been selected to support global head of trading at Ninety One, Cathy Gibson, as deputy, taking up the role after 26 years at the business.

Yanela Songca

Chosen to replace him in his regional role was Yanela Songca who has been appointed to take up the trading reins in South Africa after serving as a senior trader at Ninety One for nearly nine years. Songca’s appointment comes after nine years with Ninety One, originally joining the asset manager in 2015. He will report to Blatch.

Gibson told The TRADE: “The enhancement of his [Blatch’s] role is reflective of his contribution to the global book of business.

“[…] Throughout his career, Yanela has garnered cross asset-capabilities, having commenced his career on the equity desk before transitioning to the fixed income desk, this is no small achievement given the structural differences between the asset types. I would congratulate both Yanela and Doug.”

8. LSEG outage suspends trading on AIM stocks

At number eight came the attention-grabbing news from October that the London Stock Exchange (LSE) had experienced an outage which left just FTSE 100, FTSE 250 and IOB securities still available for trading.

LSE, who at the time of the story’s publication was still investigating the fault, explained that AIM stocks specifically were currently halted, with the exchange confirming that “orders in all other instruments currently halted will now be expired”.

More recently, this month, LSEG experienced another such outage, its second on AIM stocks in less than two months.

The outages are likely to spur on ongoing analysis by regulators globally over the stability and resilience of exchanges and procedures during market outages – specifically as regards their communications.

In May, ESMA published its opinion on how trading venues should manage their operations and communication in the event of a market outage, with the comments following a consultation which the regulator launched in September 2022. ESMA reiterated that prior to an outage, venues should have a clear outage plan in place to be deployed should such an event occur.

In addition, earlier this year the UK’s Financial Conduct Authority (FCA) set out plans to create a taskforce to work on “good practices” in relation to conduct during an outage, as part of a secondary markets overhaul – announced in May.

During the second outage, LSE confirmed in a member notice at 9:23 on the morning of 5 December that it was investigating an issue impacting its trading system and that it was “undertaking immediate analysis”. Trading on all instruments other than FTSE 100, FTSE 250 and IOB securities was halted until 9:55 am when the exchange confirmed that it was set to resume trading at 10:15 am.

“Instruments will go into auction at 09:55 with uncrossing beginning at 10:15. All live orders remain on the system,” said the exchange in an update. However, following the opening of trading once again with said auction the problem reoccurred. In an update at 11:56 am, the exchange confirmed the issue was ongoing and that it was continuing to investigate. Trading resumed at 12:43 pm UK time.

The market has become increasingly concerned about the flurry of outages seen across the market. In June, SIX Swiss Exchange experienced its worst outage for over 10 years, halting trading for three hours, and other previous outages include Nasdaq’s Nordic markets which closed on 16 November 2022 without an auction, while marketplaces of the European exchange operator, Euronext, also suffered a three-hour interruption to trading on 19 October 2020.

Deutsche Börse also experienced two separate outages during 2020 due to software glitches. The issue is also one present outside of the EU, with a software issue coinciding with the launch date for the upgraded ASX Trade system, provided by Nasdaq, which forced the ASX to shut down for four hours on 16 November.

The post The TRADE’s most read stories of the year part one: Major acquisitions, senior appointments and exchange outages appeared first on The TRADE.

Asset manager Ninety One promoted from within for its new deputy global head of trading and head of trading for South Africa. Former head of trading for South Africa at Ninety One, Doug Blatch, has been selected to support global head of trading at Ninety One, Cathy Gibson, as deputy. He takes up the role after 26 years at the business. Chosen to replace him in his regional role is Yanela Songca who has been appointed to take up the trading reins in South Africa after serving as a senior trader at Ninety One for nearly nine years, originally joining the asset manager in 2015. He will report to Blatch. 

Jonathan Tse has been appointed managing director, EMEA head of electronic trading quant analytics, platform and product at UBS, as he moves over from Credit Suisse. In his new role, Tse is set to focus on growing algo platforms, as well as working in electronic trading for cash equities, global FX, and global exchange traded derivatives. Prior to this role, he spent almost 17 years as managing director, head of EMEA AES product and global execution services quant product EMEA at Credit Suisse.

Simon Steward was appointed buy-side chair of not-for-profit member organisation for the equity marketplace, Plato Partnership, replacing Christoph Hock, head of multi-asset trading at Union Investments. Steward, director and European head of equity trading at Capital Group, has been a member of the Plato board for three years and has more than 24 years of experience within capital markets which he is set to leverage in this new role. Hock’s departure is linked to his recent career change, in which he will step away from his role to pursue an opportunity in digital asset and tokenisation within the asset management firm, focused on: token economy, digital assets, and data science.

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Former head of trading for South Africa at Ninety One, Doug Blatch, has been selected to support global head of trading at Ninety One, Cathy Gibson, as deputy. He takes up the role after 26 years at the business.  

“The enhancement of his [Blatch’s] role is reflective of his contribution to the global book of business,” Gibson told The TRADE. 

Yanela Songca

Chosen to replace him in his regional role is Yanela Songca who has been appointed to take up the trading reins in South Africa after serving as a senior trader at Ninety One for nearly nine years. The emerging markets specialist has significant operations in the region.  

Watch now – Ninety One’s Yanela Songca on finding the right level of transparency in fixed income 

Songca’s appointment comes after nine years with Ninety One, originally joining the asset manager in 2015. He will report to Blatch. 

“Yanela joined us through the graduate recruitment programme and now represents the emerging leadership in the business and will be a key part of future proofing the trading function in the region,” Gibson told The TRADE. 

“Throughout his career, Yanela has garnered cross asset-capabilities, having commenced his career on the equity desk before transitioning to the fixed income desk, this is no small achievement given the structural differences between the asset types.” 

“I would congratulate both Yanela and Doug.” 

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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.”

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