Jessica Lana was named executive director – ETF distribution at Goldman Sachs having previously spent almost six years at Bank of America Merrill Lynch. Prior to the move, Lana worked as vice president – institutional commodity sales EMEA, ETFs, quantitative investment strategies QIS). She has also previously worked at Macquarie Group, ETF securities and AECOM. 

ABN AMRO Clearing Bank appointed Samantha Page as regulatory manager following almost two years at Euronext. Most recently, Page served as head of market structure, with a focus on EU and UK policy and advocacy, as well as sales and product development. Prior to joining Euronext, Page spent nearly seven and a half years at the Financial Conduct Authority (FCA), serving in a wholesale banking supervision and authorisations role. Before that, Page spent three years as a director in sales and marketing for futures and over the counter clearing at Bank of America Merrill Lynch and prior to that, almost two years at Royal Bank of Scotland as a director in central counterparty clearing.

AllianceBernstein (AB) appointed Andrew Chin as chief artificial intelligence officer, a newly created role at the firm. Chin is an AB operating committee member with a 27-year career at the firm. He most recently served as head of investment solutions and sciences at AB. Elsewhere during his tenure at AB, Chin served as head of quantitative research and chief data scientist, alongside serving as the firm’s chief risk officer for more than a decade. Chin has held a range of leadership roles in quantitative research, risk management and portfolio management at AB, both in New York and London, since joining the firm in 1997. As part of his new appointment, Chin will be based in New York.

Brokerage business MIT SIM appointed Neil Terence O’Connor as equity trader. Milan-based O’Connor joins following almost 15 years at ACCIONA Group’s Spanish asset manager, BESTINVER. He most recently served as equity sales trader, leveraging key knowledge of the Italian, Swiss, US and UK markets. He also previously worked for Gestnord, the brokerage arm of Banca Sella.

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Chin is an AB operating committee member with a 27-year career at the firm. He most recently served as head of investment solutions and sciences at AB.

Elsewhere during his tenure at AB, Chin served as head of quantitative research and chief data scientist, alongside serving as the firm’s chief risk officer for more than a decade.

“Andrew’s appointment to this new position recognises our firm’s progress with AI and its future potential,” said AB’s chief operating officer, Karl Sprules.

“As AI continues to play a critical and transformative role in enhancing AB’s investment-research, operational and business procedures, and improving efficiencies across our corporate functions, we look forward to having an industry veteran like Andrew lead our firm into the future in this newly created role.”

Read more – Artificial Intelligence in fixed income: A paradigm shift

Chin has held a range of leadership roles in quantitative research, risk management and portfolio management at AB, both in New York and London, since joining the firm in 1997.

As part of his new appointment, Chin will be based in New York.

“This new role signifies the evolution of not only my career path at AB, but the broadening role that data science and AI are playing across the financial services industry,” Chin.

“I look forward to continually collaborating with teams and leaders throughout the organisation to harness the power of AI to ultimately deliver better outcomes for our clients.”

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The new JV is set to enable Societe Generale to offer clients a suite of global services across the equities value-chain, ranging from equity and macro research to agency execution, equity derivatives, prime brokerage and equity capital markets offerings.

“With high-quality research on over 1,000 stocks, Bernstein is a pure-play provider of trusted research and execution that helps investors generate insight, alpha and exceptional value for their clients around the world,” explained Hatem Mustapha, co-head of global markets activities at Societe Generale in a social media post last week. 

The team

The JV, first reported back in November 2022, is set to operate across 16 countries, with key hubs in: Hong Kong, London, Mumbai, New York, and Paris. Due to the global scale, the new entity has understandably led to a rejig of the operational set up at Societe Generale and AllianceBernstein only where there was a duplication of offerings.

Read more: AllianceBernstein and Societe Generale to partner on cash equities push

Combining these two entities across Europe meant that potentially hard decisions were on the table when it came to bringing the similar platforms and offerings together.

This combination was a particular focus when it came to research and trading, and primarily the case for the UK team, The TRADE understands. However, on the trading side disruption was reportedly minimal. 

The JV now has one unique trading team covering both high touch and low touch per region – in the US, Europe, and Asia, respectively.

In the US, most of this team hails from Alliance Bernstein, The TRADE has learnt, whilst in Asia and in Europe the teams are a 50/50 split of both Societe Generale and Alliance Bernstein’s existing teams.

In a joint announcement earlier this month, the two firms stated that the ultimate objective is for Societe Generale to eventually own 100% of both entities after five years with AllianceBernstein exiting – an arrangement which had been on the table since day one, The TRADE understands. 

Senior executives for the JV have already been announced, with previous chief executive of Bernstein Research Services, Robert van Brugge, having been named chief executive of Bernstein and Stephane Loiseau, previously head of Societe Generale’s cash equities business, appointed deputy chief executive.

The priorities

Speaking to The TRADE about the main focus for the JV going forward, Loiseau says that from Bernstein’s perspective, the priority is equity prime brokerage.

“It is definitely the biggest wallet in equities. When you look at the global picture, cash equities is a small sliver in comparison and currently the two are connected so now we’ll finally be in a position where we can build that as a product globally.”

Loiseau added that the joint venture provides the opportunity to be relevant globally and across the bigger sway of the equity chain.

“Societe Generale has obviously very strong expertise in derivatives. So, once you put these two things together (research and cash equities with equity derivatives and prime services) you have the scope and expertise to offer world class content (e.g. research) and a leading global trading platform.”

Read more: When it comes to desk set-ups, buy-siders are readjusting how derivatives fit in

The combination of the two offerings poses an important question as to the migration of the back office and trading systems.

Quant trading and algos are the key focus for the new entity going forward, The TRADE understands. Bernstein’s setup is based on Societe Generale providing clearing and settlement services, however, both firms’ trading systems are set to be kept in place for the time being.

A review process is expected over the coming months and years.

“Certainly, operating two trading platforms is not necessarily the best from a cost perspective. But, with this approach, we’ll be able to do that with full knowledge about the advantages and disadvantages of each platform […] We feel that keeping the two IT stacks was the best option to minimise disruption for clients,” explains Loiseau.

In terms of the JV’s technological focus for the time being, algos are the key focal point. Bernstein is aiming to grow their footprint and reportedly plans are in place to launch two algo stacks in the next couple of months.

Furthermore, Loiseau tells The TRADE that one of the key strategic differentiators for Bernstein will be from the quant trading perspective. The firms intend to leverage their newly combined large team of quants and developers – “we’re much more relevant than each entity was separately”.

The clientele

While AllianceBernstein and Societe Generale had a previously extensive overlap in their offerings , when it comes to client-base, there is notably much less commonality between the two businesses.

While AllianceBernstein typically services long-only traditional funds, Societe Generale’s client base has historically focused more on the quantitative and hedge fund type firm. 

Speaking to the geographical reach, Loiseau shares that during the analysis stage, the firms did not see client overlaps in the same geography with some instances demonstrating that Societe Generale did European business with one client while AllianceBernstein covered the US and Asian business already: “We didn’t see a great deal of overlap from the client perspective and weren’t really sharing clients on the same product.” 

When it comes to the global footprint, geographically, the key areas of focus for expansion are Asia, The Middle East and North Africa, The TRADE understands.

Read more: AllianceBernstein becomes latest buy-side to set up shop in the Dubai International Financial Centre

“The two client bases are very complementary in terms of where we want to grow. First and foremost, it is about making sure that we cross sell to these various client bases,” concluded Loiseau.

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Named Bernstein, the move follows the original announcement to form the joint venture in November 2022.

Read more – AllianceBernstein and Societe Generale to partner on cash equities push

Bernstein will provide institutional investors, corporates and financial institutions with investment insights into North America, European and Asia Pacific equity markets, alongside liquidity access and global trading technology.

The joint venture will enable Societe Generale to offer its clients a suite of global services across the equities value-chain, ranging from equity and macro research to agency execution, equity derivatives, prime brokerage and equity capital markets offerings.

With over 750 employees serving clients worldwide, Bernstein is organised under two separate legal vehicles with a head office in New York which will cover North America, as well as a head office in London, covering Europe and Asia. This will also be complemented by major hubs in Paris and Hong Kong, and various regional offices.

In a joint statement the two firms stated that the ultimate objective is for Societe Generale to eventually own 100% of both entities after five years.

“With Bernstein, a new leader is emerging in cash equities,” said Slawomir Krupa, chief executive of Societe Generale.

“This joint venture illustrates Societe Generale’s capability to develop innovative pathways to further expand our client offering as we increase our value proposition for the benefit of our investor and issuer clients, leverage synergies within our Group, and grow our revenues sustainably.”

Previous chief executive of Bernstein Research Services, Robert van Brugge, has been appointed chief executive of Bernstein.

Elsewhere, Stephane Loiseau, previously head of Societe Generale’s cash equities business, has been appointed deputy CEO of Bernstein.

“Bernstein’s mission has a foundation rooted in servicing clients with best-in-class research and insights,” said Seth Bernstein, chief executive of AllianceBernstein.

“Through this joint venture, Bernstein can continue to build out a cash equities and research business that seeks to set the standard for delivering global investment expertise and an even stronger set of products and services for global clients.”

The closing of the transaction has been approved by the relevant regulatory and antitrust authorities.

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The move comes as part of AB’s strategic plan to strengthen its presence in the Middle East. AB has been granted a Category 4 Licence from the Dubai Financial Services Authority (DFSA), the independent regulator of financial services conducted in the DIFC.

Jean-Paul Hobeika, managing director of Middle East institutions, has been appointed as senior executive officer. He will work alongside Eduard van Nes, head of intermediary sales for Middle East and Africa.

“This marks a significant milestone for AB and we are thrilled to bring our extensive expertise and investment solutions to the region’s discerning investors,” said Hobeika.

“We are confident that with the opening of its new office in DIFC, AB is poised to become a leading player in the region’s financial industry.”

With the new premises, investors across the region, including institutional clients, distribution partners and family offices, will have increased access to AB’s asset management services.  

“We welcome global industry giant AB to DIFC as we continue to attract top international financial institutions in line with Strategy 2030,” said Arif Amiri, chief executive of DIFC Authority.

“AB’s commitment to the region is testament to Dubai’s strategic position at the centre of the world, providing the firm with access to $8 trillion of private wealth across the Middle East, Africa and South Asia.”

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Investment manager Alliance Bernstein is teaming up with investment bank Societe Generale to create a major new equities research platform.

The new venture will provide clients including institutional investors and corporate and financial institution issuers with a global suite of services across cash equities and research, combined with Societe Generale’s integrated equity capital markets, equity derivatives and prime services platforms.  

The platform will offer investment insights into the American, European and Asia Pacific equity markets, in addition to new liquidity access and global trading technology.  

Societe Generale will take a 51% interest in the joint venture, with an option to reach 100% ownership after five years. The business will be run as a long-term partnership under the Bernstein name, headquartered in London. Upon closing, Robert van Brugge, CEO of Bernstein Research, is to become CEO of the new entity for an initial term of five years, while Stephane Loiseau, the head of Societe Generale’s cash equities business, will become deputy CEO. 

“In Societe Generale, we have a strategic partner who is committed to strengthening and growing our world-class cash equities and research business,” said Seth Bernstein, AllianceBernstein’s president and CEO. 

“This partnership with one of the most recognised firms in research and cash equities, combined with our global leadership in equity derivatives, would create an indisputable leader across the equity business for the benefit of our issuer and investor clients,” added Slawomir Krupa, head of global banking and investor solutions at Societe Generale. 

“This partnership gives us the opportunity to participate in the high added value segments of the global equities business,” said van Brugge.  

“And, importantly, it would also allow us to preserve and expand our firms’ unique strengths, expertise, and cultures,” added Loiseau. 

The transaction is expected to close by the end of 2023. As AllianceBernstein will own less than 50%, the firm plans to remove Bernstein Research from its own financial statements following the deal. The entity will be 100% consolidated by Societe Generale from an accounting and regulatory perspective, and a call option will be granted to the bank to purchase AllianceBernstein’s 49% share at a later date.

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Frank Loughlin

How does ESG relate to the trading desk?

The industry is currently in the early stages of what will, no doubt, be an iterative process to answer that very question – how does ESG relate to trading and the execution ecosystem?  Topics such as the climate impact of trading technology and infrastructure, the use of AI in trading strategies, the sustainability of our trading partners and technology vendors, the diversity of our own teams and the teams we partner with, along with many other significant topics, will form the basis for this important and ongoing conversation. 

Initiatives like Sustainable Trading [a non-profit membership network dedicated to transforming ESG practices within the financial markets trading industry] have been created to help facilitate the ongoing dialogue around ESG in trading and help frame industry best practices for integrating and measuring ESG in the execution process.

Introducing an engagement framework at the trading desk level to create practical and measurable ESG best practices will hopefully result in positive change across the industry.  Creating broad networks of ESG champions across the trading landscape will only serve to strengthen our collective approach to incorporating ESG and sustainability principles into our trading businesses.  As with any similarly dynamic initiative, the ability to be introspective is key. Turning the lens inward to evaluate your own internal practices is often a constructive starting point in the process. 

How can firms best navigate changing market structure in the equities market?

Navigating market structure complexities has been a challenge for many of us throughout our careers.  The impact of new technologies, new regulations, and expanding numbers and types of venues, all present unique challenges as we strive to optimise execution outcomes in pursuit of greater returns for our clients. 

At AllianceBernstein, we’ve always believed that using data to address market structure issues has positively impacted our ability to meet these challenges.  The ability to exhaustively measure not only overall execution quality but the impact of different routing strategies or technologies, the contribution of different trading partners or venues – to name just a few – has both positively informed, as well has helped manage, our response to the ever-changing equity market structure landscape. 

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AllianceBernstein has become the first buy-side firm to execute a corporate bond block transaction with aggregated liquidity sourced from four buyers via the Broadridge AI trading platform, LTX.

The first-of-its-kind fixed income trade leveraged the LTX platform’s dealer network, allowing AllianceBernstein to sell a large block of bonds and access the aggregated liquidity from the buyers simultaneously and in real-time.

Broadridge said the platform’s RFX trading protocol allowed clients to bid for their preferred amount of bonds and improve prices to fulfil the order, while its AI technology identified the dealers and natural buyers of the bond, rather than placing dealers in competition.

“A challenge facing many asset managers is how to trade blocks of bonds more efficiently,” said Tim Kurpis, head of investment grade trading at AllianceBernstein.

“Most electronic solutions focus on smaller sizes and liquid bonds, but 70-75% of the corporate bond market still trades over the phone. LTX brings a different approach for accessing liquidity that offers new protocols to better match potential counterparties and allow multiple bids or offers for a bond.” 

Launched in June, the LTX platform processes over $10 trillion in notional volume each day across over 10 dealers and 40 asset manager clients, using AI and protocols to provide the buy-side and sell-side with a more detailed view of pre-and post-trade liquidity.

Last month, Broadridge successfully secured a patent for the RFX proprietary trading protocol which was designed to improve liquidity, efficiency, and execution offered by broker-dealers to their buy-side clients while also minimising information leakage.

“This is a major milestone for the fixed income market,” said Jim Toffey, chief executive of LTX. “This is the latest example of how our next-gen RFX protocol benefits market participants and goes beyond electronifying the phone call to create a digital liquidity pool of natural counterparties that will move the bond market forward.”

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Jim Switzer, senior vice president and global head of fixed income trading at AllianceBernstein

Where do your priorities lie in terms of optimising AllianceBernstein’s fixed income trading operations?

Jim Switzer: Data aggregation is probably our number one priority right now. We’ve been amassing historical and point-in-time data through our ALFA market liquidity surveillance tool over the last five years. This has given us a fairly robust picture of the market, which is now informing our approach to direct connectivity, both to ATSs and the sell-side.

Internally, our focus is on systemisation of our investment process. In today’s challenging liquidity conditions, systemisation allows us to use different liquidity strategies. One example is the concept of portfolio trading. The aim is to look at baskets of risk in a similar way and be able to trade multiple portfolios at the same time. This requires not only electronic process change but also behavioural process change from traders and the investment team in how they approach risk management and portfolio optimisation. It also requires support from the top: senior management has made it very clear we should strive for innovation and efficiency.

In the three months to the end of May, we executed around US$10 billion of portfolio trades, 25% of our high-touch volumes year to date. Recognising the growing role of passive investment vehicles in the fixed income markets, the core idea is to transfer diversified risk baskets, as opposed to large blocks of idiosyncratic risk, which the sell-side do not want to buy because they can’t hedge it. Instead, we can sell a US$500m diversified basket, for example, if we can identify opportunities from total return funds or exchange-traded funds (ETFs). The process is automated through our Abbie ‘bot’, a virtual portfolio assistant, which can quickly optimise these portfolios, helping traders to price them and transfer the risk.

How is the rise of passive investment vehicles changing the fixed income market?

JS: The growing size and presence of ETFs has created an ‘arb-able’ event. Ever since the crisis, there has been speculation about the potential role of alternative liquidity providers. Compared to the pre-crisis environment, today we no longer have sell-side prop desks, dealer inventory is substantially reduced, and hedge funds use less leverage. But now we have an arb-able opportunity, with dealers using their balance sheet to support diversified risk transfers, which offer us an important way of sourcing beta.

Because they have insight into the ETFs’ create/redeem process and can hedge their risk, the sell-side can facilitate riskless transfers, acting as intermediary between active and passive managers. This market was still fairly sketchy only a couple of years ago, but we’re now able to transact in it very consistently today. In parallel with this change from a principal-based market-making model to a riskless transfer model, the bigger change is how the sell-side engage with us as clients. Rather than telling us what they’re trying to get done, they ask us what we’re trying to get done.

What support do you need from third-party providers to augment your own initiatives?

JS: One of the most important things we need is a utility to connect fixed income market participants and trading platforms. I don’t think any asset manager wants to maintain 10-20 APIs to connect to their main sell-side counterparts, nor do dealers want to maintain different APIs to their 100 best clients. There needs to be a utility to connect us all together, allowing direct connectivity to and from our execution management systems. We’re digesting lots of data sources, we have multiple tools and analytics running, and we want to be able to engage the market efficiently at the point of risk transfer. We can’t always do that right now given the existing infrastructure and often have to resort to voice trading.

Another thing we’re focused upon is bot-to-bot trading. Using our bot, Abbie, we’re in beta testing with a number of sell-side firms to enable bot-to-bot smart order routing, where the trade is sent to the sell-side firm and is automatically routed either to an algo or for risk pricing based in the information Abbie sends with the trade.

Automation in primary issuance has lagged the secondary markets. How should the challenge be addressed?

JS: Without a doubt, the single biggest waste of time for a trader on the fixed income desk is the new issuance process. It could and should have been handled two years ago. I believe there is a willingness on the sell-side to come up with a digitised solution. It’s not a matter of changing the allocation process, rather it’s about the securities set-up process and how we communicate orders back and forth. It’s a problem for the sell-side too and it’s impacting the secondary market. We’re agnostic to the solution and are willing to listen to the syndicate desks. But make no mistake about it: we need a solution.

How are you augmenting the skill set on your fixed income trading desk to ensure you trade effectively in an increasingly automated?

JS: We still need the people with 20-30 years’ trading experience, but we’re interspersing them with traders that have smart order routing skills, or the ability to write code. There are also similar developments in our analyst and portfolio management teams.

Even though the equity markets are ahead of fixed income from an automation perspective, they still have high-touch traders driving performance. We too need experienced traders that are skilled in risk taking and alpha generation, but a large amount of our day-to-day activity can be smart order routed and traded low-touch. We need a different skill set there. Using technology to engage the market quicker and more efficiently really does allow us to generate alpha; we can quantify the benefit to our clients via transaction cost analysis.

We recently hit four million messages a day, in terms of data coming into the fixed income desk, all of which helps traders make faster decisions. Most people think about best execution at the point of trade, but it as a more multidimensional process with many inputs. For us, the Abbie bot highlights opportunities based on our quant, fundamental, portfolio positioning and liquidity views, then builds approved trades for review by the trading desk where ALFA flags all the available liquidity options to the trader, with reference to various momentum indicators and liquidity scores. Based on all this, we consider the possible strategies to engage liquidity, remembering of course that the best way to generate alpha is to be a liquidity provider.

It’s important to have diverse experience on the trading desk. We have traders that have traded on all three of emerging markets, investment grade and municipals, while others have moved around between desks geographically. An ideal candidate is someone with equities experience as it is clear we in fixed income are now following the same path. When I first talked to our equity guys, I learned about dark pools, all-to-all trading and direct connectivity, but I also heard about illiquidity and fragmentation, which are not words I expected to hear from an equities trader. They are a lot further along with the electronic process change, mostly because of regulatory drivers. In fixed income, we’ve had relatively little direct regulatory intervention, but we all recognise that to compete going forward we have to be able to do things in a much more efficient manner.

This article was originally published in the FILS in Philly Today magazine, produced by The TRADE, which was distributed to attendees of this year’s Fixed Income Leaders Summit USA conference.

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OpenFin will provide AllianceBernstein with its application-agnostic operating system (OS) created specifically for financial markets participants, and is now in the process of migrating the investment manager’s existing .NET and legacy applications onto the web-based OpenFin OS.

The project forms part of AllianceBernstein’s digital transformation strategy and Michael Herskovitz, co-head of technology and operations at the firm, told The TRADE that its strategy revolves around modernising its technology infrastructure while maximising the usage of third-party applications coming to market.

“It was a critical component of ensuring that as we were migrating applications to the cloud, we were able to build key components of interoperability, that allowed us to link applications quickly, and also to avoid having to deal with a morass of APIs,” Herskovitz explained.

“Now we have taken it even further to understand how we can link applications and tools internally, both things that we build as well as things that we integrate.”

One of the largest obstacles facing buy-side firms that are transitioning to a new technology stack is how to incorporate legacy applications and code that are integral to workflows into a new structure without disrupting vital processes.

Herskovitz said that by deploying a cloud-based operating system, AllianceBernstein provides a higher level of interoperability between legacy code or third-party applications that does not impact negatively on workflows.

“The degree to which you can now bring your legacy into your current generation of development allows you to have a migration path that is much more straightforward, rather than having to plan around waiting months, or even years, before retiring a piece of code,” he said.

“It allows you to give users that are comfortable with their existing functionality a transition period that is less of a shock therapy approach.”

Cloud-based technologies have become a staple of upgraded technology infrastructures on the buy-side and Adam Toms, CEO of OpenFin Europe, said that this has become a sea change for those asset managers aiming to optimise interoperability.

“With this OS layer now being used across the financial markets it really facilitates this level of interoperability for internal and external applications,” he said. “It traces back to the FCD3 initiative that we launched some time ago and contributed into FINOS, which is going to serve as the pillar how interoperability truly scales across the industry.”

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