As one of the most anticipated awards of the year, the recognition is designed to celebrate those individuals who have made a significant impact on their own organisation and, equally, the industry externally, with a commitment to bettering and future proofing the markets for years to come. 

Shortlisted individuals are repeated contributors to discussion whether that be through panels, associations or schemes to support the next generation joining the financial services industry. 

Last year, Goldman Sachs’ chief operating officer for EMEA equity execution services Eleanor Beasley took home the Industry Person of the Year Award in a landslide victory. 

The winner will be decided by a live industry vote at The TRADE’s Leaders in Trading gala awards night on 7 November at The Savoy. Congratulations to this year’s shortlisted nominees! 

Industry Person of the Year 2024 shortlist: 

James Baugh, managing director, head of European market structure, TD Cowen

James Baugh is an industry stalwart, having worked in the financial markets for over 25 years. Over the course of his career, Baugh has become renowned as a trusted partner to clients and for leading positive change in the European equities marketplace. He is an active participant in discussions on key topics impacting the industry. His team provides opinions and insights into shifting regulation and market structure, illustrating how these changes directly affect day-to-day business. 

Baugh currently serves as managing director, head of European market structure at TD Cowen; a position he has held since August 2021. Since joining the firm, Baugh has been a key driving force behind the growth of the firm’s European agency equities execution business. He has also helped shape the firm’s liquidity strategy by guiding clients through the complexities of European equity markets.  

Before joining TD Cowen, Baugh spent five years at Citi as European head of market structure. This followed 11 years at London Stock Exchange as head of equity sales, where he led initiatives like Turquoise Plato Block Discovery.  

A graduate of Newcastle University, Baugh began his career as a commodity analyst before taking on various roles at Dow Jones, including managing their European power index business. 

During the span of his career, Baugh has also represented several top financial organisations both across various industry forums including AFME, Q15 and Sustainable Trading, and on the board of Turquoise as a non-executive director.

Kate Finlayson, managing director, FICC market structure and liquidity strategy, JP Morgan

Kate Finlayson has considerable experience in financial markets, boasting a 25-year career that spans equities, fixed income, currencies and commodities.  

She currently serves as global head of FICC market structure and liquidity strategy at JP Morgan, having joined the firm in 2017. As part of her role, Finlayson has helped establish the FICC market structure function at JP Morgan, which she has developed into a global business with an extensive scope and reach.  

Before joining JP Morgan, Finlayson spent 14 years at UBS, holding a variety of senior positions including her most recent stint as head of market structure and liquidity strategy. Prior to UBS, Finlayson worked at Goldman Sachs in equity capital markets and prime brokerage.  

At JP Morgan, Finlayson engages with clients on the impact of market structural developments and drivers of change. Finlayson and her team also provide critical insights on emerging execution trends, microstructural dynamics and policy initiatives shaping liquidity across global markets. Widely considered to be a thought leader in the industry and a market structure expert, her insights are increasingly in demand. 

Alongside her role at JP Morgan, Finlayson is a trustee on the board of directors for JP Morgan Chase Pension Plan Trustee Limited. She also has external roles on industry advisory committees, including the UK FCA’s Secondary Markets Advisory Committee as well as the EMEA and US Quorum 15 Fixed Income advisory boards.

Bianca Gould, head of equities and fixed income EMEA, markets, BNY

Bianca Gould has extensive experience spanning 20 years in the industry, holding several senior roles throughout her tenure. She is particularly dedicated to supporting junior talent across the market.  

Currently, she is head of fixed income and equities EMEA within the BNY Global Markets Trading division and also sits on the executive committee for Pershing Limited. 

As part of her role, Gould is also responsible for expanding BNY’s execution footprint across EMEA.  A critical part of this strategy includes the recent launch of the firm’s new EU desk, based in Dublin Ireland. The aim is to deliver integrated execution serviced to its clients and facilitate more efficient trading for EU-based clients across both fixed income and equity markets globally.

Prior to joining BNY, she was the co-head of equities electronic sales and trading EMEA for RBC Capital Markets. Before that, she worked at Redburn for 15 years, having made partner in 2009 and remained the youngest partner appointed to date until the removal of the programme after her departure.   

In recent times, Gould has taken part in the Moonwalk initiative – walking a marathon during the night – to raise money for Breast Cancer, a charity close to her heart.

Stéphane Malrait, managing director and global head of market structure and innovation for financial markets, ING Bank

Stéphane Malrait is a market structure oracle. As a familiar face at some of the most important industry events, he works closely with advocacy groups, policy makers and regulators to make real change across financial markets.

Malrait works tirelessly to drive positive change in trading and market structure in the capital market space, understanding the important role of continued technological developments. At present he is working on the implementation of financial regulations that will impact the clients trading activity and transform how trading floors operate.  

Currently he serves as managing director and global head of market structure and innovation for financial markets at ING Bank, leading the financial market innovation strategies within the firm and contributing to industry working groups as a representative of the bank.

Before joining ING in 2015, Malrait spent eight years at Société Générale, most recently working as global head of FIC eCommerce. He also previously worked at JP Morgan Chase for ten years, serving in different roles in global FX eCommerce business management and cross-asset eCommerce technology, based in London and New York.

Since 2005, he has been an active member of the ACI Financial Market Association and is also a key part of the ECB FX contact group and a board member of ICMA.

Simon McQuoid-Mason, head of equity product and quant research, SIX Swiss Exchange

Simon McQuoid-Mason is a consistent thought leader across the trading landscape, continually unpacking the latest industry trends and sharing key insight on industry panels, important forums, and via insightful interviews.

McQuoid-Mason is currently head of equity product and quant research at SIX Swiss Exchange, having joined in 2020 as head of equity product for UK and Ireland. In his role, he is responsible for driving the evolution of SIX’s equity markets offering, including SwissAtMid and is also the lead author of SIX’s Trading InfoSnack series, a thought-provoking analytics series on market micro-structure and trading dynamics.   

He also serves as the current non-executive chair of the assets for the Te Aupōuri iwi, a Māori tribe from the far north of New Zealand, from who he descends. 

In addition, his past roles include stints at Bank of Queensland, the London Stock Exchange, Morgan Stanley and Emerge Capital Partners.   

A proponent of a pragmatic approach to the various trading areas, McQuoid-Mason consistently advocates for a rethink in terms of how key industry challenges are addressed, with a particular focus on ensuring policy makers and the wider public understand the benefits of thriving equity markets and overall reducing market complexity.

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Not that the seemingly never-ending list of aforementioned market occurrences had noticeably hindered the prime business. The ‘one thing after another’ era was a thorn in the side for a segment that is particularly sensitive to market forces impacting its clients’ appetites for lending and other prime services. But the headwinds have subsided, and the tailwinds have finally arrived in the form of new fund launches, a rise in allocations and increasing returns for funds, not to mention the continuing emergence of multi-strategy hedge funds. Prime brokerage is an industry which thrives off its clients’ growth, and that’s exactly what we’re seeing now.

“Year-to-date, we’re seeing for the first time in many years a notable uptick in new fund launches and spin outs from bigger places,” says Jack Seibald, managing director, co-head of Marex prime services and outsourced trading. “Within that, there’s more billion-dollar and above launches in the last twelve months than there were in the preceding several years. That’s adding a level of interest in the sector again by allocators. From our cap intro team, we’re certainly seeing from the allocator community renewed interest in hedge funds.”

According to Coalition Greenwich, the top dozen investment banks offering prime services saw revenues rise to a record $20.4 billion in 2023. Meanwhile, with regards to equities, revenue deriving from prime brokerage compared to trading shifted from a 30% versus 70% ratio a decade ago, to 40% to 60% in 2023.

Dominic Rieb-Smith, managing director, international head, prime services sales, JP Morgan, refers to the past year as “a standout”. Meanwhile, Patrick Travers, head of distribution at Clear Street, says he agrees with the sentiment around it being a good 12 months for prime brokers: “From our perspective, the markets have remained strong with pockets of volatility which tend to allow for investment opportunities and increased balance activities which are key drivers across the equity finance landscape.”

In addition to the billion dollar-plus launches, CIBC Mellon also points out to us the noteworthy increase in scheduled fund launches with assets under management of $500 million or greater – up almost two-fold on what was observed in 2023.

Penny Novick, global co-head of prime brokerage at Morgan Stanley, picks up on this point, stating: “With heightened dispersion across equity markets, hedge funds continue to see strong opportunities to generate alpha globally, which has led to increased levels of gross exposure being deployed across the fundamental long/short universe. 

“Additionally, multi-manager hedge funds have continued to win the lion’s share of the new capital coming into the industry as they have been rewarded for their ability to mitigate risk while still delivering positive alpha to their investors. The positive performance combined with markets trading at all-time highs and elevated gross leverage across the hedge fund client base has meant prime brokerage balances have reached peak levels.

“Views from the allocator universe towards the broader hedge fund industry also remain positive, and while this hasn’t necessarily led to net inflows to the industry as a whole up to this point, the forward-looking expectations based on our recent Investor Survey would point to increased allocations to hedge funds in the next 6-12 months, which we expect will also have a positive impact on the prime brokerage business.”

We spoke to around a dozen primes across this feature, and anecdotally, there were also countless examples of growth, including – but not limited to – an uptick in growth in Europe, something backed up by a recent IFR article titled ‘Europe’s hedge fund industry is taking off after lost decade’, while there was also positive news out of APAC and opportunities highlighted in the Middle East and Australia.

And the purple patch isn’t confined solely to the largest players, the chasing pack, or the plucky young upstarts – the overall PB pie is growing, meaning everyone’s slice is now more lucrative than ever before. 

Bigger and better

Just five years ago when JP Morgan surpassed $500 billion in prime brokerage balances, the bank’s head of global head of prime finance, Jonathan Cossey, quipped: “Next stop, one trillion!”. Well, fast forward to 2024 and the PB behemoth and its counterparts in the ‘big three’ are all reportedly around that coveted milestone.

Data from Convergence tracking the top 25 prime brokers showed their market share grew from 83.3% in April 2023, to 92% in 2024. Goldman Sachs, Morgan Stanley and JP Morgan all increased their market share substantially, despite the former two seeing drops in the number of funds they have relationships with. According to Convergence data, JP Morgan saw both new client additions and a double-digit market share percentage growth.

“I think the last 12 months for us in particular have been standout,” says Rieb-Smith, which has logged its best score in our sister title Global Custodian’s Prime Brokerage Survey since at least 2016. “In terms of client demand and what we have to offer, I think we’re really unique and we have benefited from that.”

Part of this has been down to the continuing rise of multi-strategy (multi-strat) funds which have very sophisticated and specific demands which can only be met by certain service providers with scale and a broad offering covering a range of asset classes.

On the topic, Rieb-Smith adds: “We’re in an environment where you’ve seen the macro community morph into multi-strats (because they’ve gone into equity strategies whether that be volume, capital markets and ultimately quant). Then you’ve got the quants who have started to look at fixed income products. These could be systematic, macro, or systematic credit funds, but you’ve seen more and more of those firms evolve into what look like multi-strat strategies. There are also the multi manager platforms that, in order to be fully diversified and attract the capital that they’re after, have become multi asset and therefore could be bucketed as multi-strat.

“If you look at what those firms need in terms of prime-related services, well, cash PB and synthetics are just the basics. Those are the relatively commoditised parts of the business. There aren’t many banks that are organised the same way as JP Morgan, whereby my team in prime financial services sales are responsible for marketing not only all those prime finance related products, but all our clearing products as well.”

“When you go through these really volatile periods of time, if the multi-managers that are really well diversified do come out stronger than monoline hedge funds, then there is an argument for investors. That’s why the money’s with them and they will probably attract even more capital. They are now trading in all these other asset classes. They need a financing platform to support all of that. We’re one of the only providers that can do all of that for them. So you can see how this growth and momentum just starts to really build over time.”

JP Morgan’s rival Morgan Stanley have been serial outperformers in the aforementioned Prime Brokerage Survey for some years now – picking up the Best Prime Broker accolade in 2022 and an Overall Excellence Honour in 2023 – and 2024 was no different, beating the global average by 44 basis points. 

The bank also highlights to us how “as a global multi-asset class prime broker, we are structured to deliver the widest range of services regardless of strategy type or product complexity”.

“At Morgan Stanley prime brokerage, we continue to be focused on growing our market share with existing clients by leveraging our unique integrated investment bank and firm strategy to deliver holistically across advisory, financing and sales and trading as well as our ability to tap into wealth and asset management channels to provide solutions to our hedge fund clients,” explains Novick. 

“Additionally, we remain vigilant in working with emerging talent early and providing them differentiated resources across consulting capital introductions, talent management, technology and client service to help these new entrants launch their businesses successfully.”

The big three can sometimes be passed over when it comes to media coverage of the prime brokerage sector, simply because of how far out in front they are with regards to market share – believed to be somewhere between 40-60% depending on metrics and who you talk to – but their capabilities and service levels are not dropping and there are still billions of dollars being invested between them into the technology underpinning these units. 

The challengers

But the growth of the overall pie is also benefitting players outside of the top three, as the headline of this piece suggests.

Ever since the exits of Credit Suisse and Nomura from the business – along with Deutsche Bank’s sale to BNP Paribas back in 2019 – the prime brokerage landscape has been dramatically shaken up to the benefit of those remaining in the business.

Over the past year, each of the top 25 primes have increased their market share – according to Convergence – with 16 of those experiencing double-digit percentage growth.

Some of the larger funds who were contemplating their next move following an exit of their previous provider moved up the table to the big three – which they likely already had relationships with already – while others switched to some of the ascending players in the industry.

In addition to this – and somewhat because of these new funds – there has been a trend of the biggest prime brokers offboarding clients or limiting access for numerous funds, leading to many mid-tier PBs looking to move upstream and ambitiously add clients who have either fallen foul of exiting primes or been offboarded. 

“You had a flurry at the time, and then it slowed down, but we’re still seeing trickles of that business two years later,” explains Seibald, referring to the exits of other primes. 

On the topic of offboarded clients, he adds: “Emerging and mid-sized managers continue to be, for the most part, ignored/shunned by the bulge bracket prime brokers as the largest participants have been able to build their books with more desirable, larger revenue producing funds that found themselves in need of alternative banks following the demise/exit from the business of several of the largest players. 

“This has created an ongoing opportunity for mid-tier prime brokers, particularly those with broad asset class and geographical capabilities comparable to those of the bulge bracket banks. This is an ongoing pattern that we suspect will continue for some time.”

Some of the aspiring players are present in the Prime Brokerage Survey, with outperforming scores set by players including Pershing, CIBC Mellon, Marex, Cantor and TD Securities. Clear Street is also continuing to make waves, despite being a much newer player on the scene.

For Marex – previously TD Cowen – a new chapter has begun under a new owner, and the transaction has been relatively seamless with the prime broker retaining its team members, and even adding talent. Seibald added that under Marex, the prime brokerage unit is starting to explore opportunities in segments of the market it previously had little to no exposure to, but where Marex is a prominent participant, specifically, commodities and futures.

Seibald’s team is joining in the upstream movers by some of the players named above, along with the likes of BTIG, Interactive Brokers, JonesTrading, and near to a dozen of the largest banks. 

It should be noted that in a market which has experienced provider exits, the shedding of less profitable clients and with looming increased capital requirements – don’t underestimate the lure of staying power and commitment to the business.

Multi-strat growth

Along with the opportunities from wanting clients, it’s really been the rise of multi-strategy hedge funds which continues to benefit the industry, particularly players with diversified capabilities across all of the asset classes and securities, as well as in the futures and commodity space. This trend, and shift away from an equity-centric sector, has cemented these prime brokerage divisions as the jewel in the investment banking crown for many of the largest players in financial services.

“A lot of the really big funds have taken in a lot of the assets that are coming into the marketplace,” says Aaron Steinberg, head of prime services at BNY Pershing, “A lot of that money from the institutional allocators, has been funnelled to a number of very large multi strategy and or multi manager platforms that those investors are just more comfortable with. There’s been a consolidation of where the assets are in the marketplace, and the biggest of the funds have gotten bigger. 

“We started to see a little bit of what I imagined was going to be the evolution of that market, which is a number of strong portfolio managers from those multi manager platforms coming out, launching their own funds. And we’ve seen some significant launches this year in that space. We’ll probably continue to see that trend.”

With two fewer major players in the space, the competition has been heating up and requires significant investment. Some of the banks behind the big three have been aggressively looking to capitalise on the continuing trend, with lots of positive noise around Bank of America, Citi, BNP Paribas and Barclays. It’s no easy thing to service these funds though, with significant investments, talent and scale required.

Outside of competing on capabilities, tech and the ability to service a range of strategies, one thing that shouldn’t be underestimated is the importance of client service. It’s for this reason that the category is such an important mainstay of the Prime Brokerage Survey and while not the ‘sexiest’ attribute of a prime broker to talk about in this fast-moving world, it is critical none-the-less.

“If you read some of the more recent Global Custodian surveys over the past few years, specifically as it relates to our business, one of the things that is stood out is the high level of client service,” adds Steinberg. “As all firms are looking to create more automation and create a stronger technological base and frankly, reduce overhead costs, something that’s gotten lost in that is that prime brokerage has traditionally been a high level of touch client service model. 

“That’s what drives clients’ ability to get the services they need, not only from the prime broker, but from the broader bank itself. A lot of the clients that we’re talking to – again, the big multi-platform, multi strategy funds – they want to have enough counterparties where they can invest how they want to when changes happen in regulation – whether it’s around RWA or whether balance sheet changes for a specific bank or there’s buying opportunities, but they also want to be really valuable to those counterparties as a whole and in total. And so, they want to be more to their counterparties, and we want to be more for our clients.”

Travers concurs: “With regards to the sell-side and prime brokerage specifically, we are all in client service on a daily basis,” he says. “The premise of what we do day in day out is to facilitate our clients’ needs and enhance their business every day. Regarding the client service team, we find that the best way to differentiate our technology offering is to have best in class client service personnel.”

Challenges ahead?

It’s not all sunshine and rainbows in the prime brokerage world, however. Looming regulatory issues and the ever-increasing complexities of the business have led to constantly evolving risk management systems.

Among the major changes is the Basel III ‘endgame’ update, the widely anticipated capital requirements hike for Global Systemically Important Banks (G-SIBs). Last year, US regulators unveiled the new capital rules for lenders, with G-SIBs seeing an increase by an aggregate of 16%.

The requirements align the US with Basel III standards which were agreed following the 2008 crisis with capital, leverage and liquidity requirements rolled out in the ensuing years, as the latest reforms look to end the reliance on internal models in the US for estimating risk and introduce standardised frameworks. 

While there is no exact timeline on the final ruleset being published and implemented, banks are preparing now and certain prime brokers have become increasingly sensitive to strategies with more punitive RWA and capital treatment. 

Additionally, in February, the Federal Reserve Board released four new hypothetical elements as a means to analyse different risks within the banking system. Two of these scenarios include two sets of market shocks which observe the hypothetical failure of each bank’s five largest hedge fund exposures under unique market conditions. This analysis will bring to light the results of a hypothetical major market disruption and the implications of it. 

Most recently, Bloomberg reported that the Bank of England is also reviewing lenders’ practices within their prime brokerage business as part of a long-running review into their exposure to hedge funds and other non-banks.

The arrival on the radars of various regulators stems from the fallout of the collapse of Archegos Capital in 2021, where its various prime brokers – of which there were many – were not fully aware of the size of the fund’s positions with other banks, and as the Bank of International Settlements put it, they thereby underestimated its overall leverage and impact on the markets in which it was active.

The silver lining was a complete reassessment of client relationships within the prime businesses of the biggest players and a wake-up call which was spun as ‘good’. 

However, the downside has been increased regulatory scrutiny.

“We’ve seen many of our competitors adjust and ‘revisit’ both their counterparty credit and risk policies following past events in the marketplace,” says Travers, though Clear Street had no involvement in the Archegos saga. “We believe that a robust risk and credit policy coupled with a stringent KYC policy will be key to avoiding another market event specifically within the prime brokerage space.”

ABN Amro adds: “The post-Archegos stabilisation trend is also evident with central clearing of OTC products, increased capital requirements and introduction of UMR. This has led the business scope for prime brokers to expand to full collateral management optimisation across multiple industry areas, with the largest benefit to UMR impacted clients. In addition, there is also interest in more efficient financing solutions, such as repo paired with custody.”

Of course, there are multiple other market structure developments and regulations for prime brokers to contend with from markets moving to reduced settlement cycles to new cyber security requirements.

 Ultimately, in 2024, the headwinds should only be a footnote to the main story – and that is around an industry reaping the rewards of a patient approach through some frankly wild years post-Covid. 

There was a phrase used throughout our outreach that the biggest are getting bigger – with regards to hedge funds – but that growth also relates to the entirety of the prime brokerage business. What this means is a likely increased investment and focus on these units from the largest players as this lucrative business begins to grow as an increasingly prominent part of each organisation. But they aren’t the only benefactors – it’s been a big year for primes of all shapes and sizes, and all those left in the market have lofty ambitions for the future.

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Anand Goyal has been appointed head of FX institutional sales for Japan, Asia North, Australia and Asia South, based in Singapore.

He will report to Cécile Gambardella, head of sales for markets for Japan, Asia North and Australia and Sam Hewson, global head of FX sales.

“As we look to build on our market leading position across the region, Anand’s appointment is a significant move that aligns with our strategy. His expertise will enhance our ability to deliver tailored FX Solutions and foster stronger partnerships with our institutional clients,” said Hewson.

Goyal joins from JP Morgan where he had been serving as head of macro FX and real money sales for Asia Pacific.

Alongside him, Hooi Wan Ng has been appointed head of markets for Malaysia. She will report to Sue Lee, head of markets for Asia South and Vikram Singh, Citi country officer and banking head for Malaysia.

She also joins from JP Morgan where she had been serving as head of local corporate sales and private side sales.

“With Hooi Wan’s extensive experience and deep understanding of the local market, we are well positioned to grow our Malaysian franchise further,” asserted Lee.

“She will lead the markets business in Malaysia with a client centric approach, leveraging our global footprint and solution structuring capabilities.”

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Stifel did not respond to a request for comment. 

Seema Arora has been appointed as execution services head for EMEA at the firm after most recently serving at Instinet for five and half years, leaving earlier this year.

During her tenure at Instinet, Arora was a keen supporter of The TRADE’s Rising Stars of Trading and Execution initiative supporting up and coming talent on the buy-side and was nominated for the Industry Person of the Year Award at Leaders in Trading 2023.

Prior to joining Instinet, Arora spent almost 11 years at Kepler Cheuvreux in senior execution services sales roles.

She also previously spent six years at JP Morgan as its head of execution sales and five years at Desdner Kleinwort as head of program trading sales.

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Liquidity can mean several different things, the panellist explained. Depending on where you sit in the ecosystem various factors come into play when selecting liquidity and a provider, with cost playing a consistently crucial role.

“Liquidity has a cost whether we like it or not. It comes from the mismatch between two investors, timing and size – someone has to gain from the mismatch,” noted another panellist.

One panellist said that liquidity is about providing a reasonable price based on facts and not feelings. “What matters is not looking at a trade by its liquidity but instead, whether a provider is allowing you to trade effectively. A holistic approach is useful for buy-side,” they said.

Evolving sell-side

During the panel, the changing role of the traditional sell-side was discussed, with a particular focus on alternative providers’ increase in market share in fixed income.

Today, alternative liquidity providers have grown to compete with traditional providers as opposed to simply disrupting the landscape. It was noted by panellists that regardless of provider type, a holistic approach to providing liquidity is preferred.

Regulations such as Dodd Frank were noted as allowing new liquidity provider entrants to enter the free market. 

Technology was also suggested by panellists as a key driver behind the proliferation of new entrants, as well as incentive, with alternative providers ultimately plugging into gaps left by traditional players.

“Incentives are divers for innovation,” said one panellist. “Looking where traditional banks left gaps is useful. It should be noted that starting from scratch is easier than banks using legacy technologies.”

The diversification of toolkits was also noted by a panellist as a driver behind the growth of alternative liquidity providers, particularly given the increasingly diverse instrument universe firms are looking to trade.

What traditional and alternative providers prioritise is ultimately different. Alternative liquidity providers – who are often more technologically focused – are often more focused on electronic smaller tickets flow for example.

As volumes increase across the spectrum, panellists argued that there is plenty of space for new liquidity providers as well as traditional ones.

“The differences are clear,” said one panellist. “It’s not about climbing rankings but bringing innovation into the market.”

Bonds ETFs

When exploring the liquidity landscape more generally, bond ETFs and the growth of this segment was also highlighted by panellists as being positive, with more sell-side said to be using ETFs alongside other tools to boost liquidity. 

Alternative liquidity providers have been leading on the provision side. However, traditional banks are investing and getting more active in ETFs with increases in market share.

“Traditional branks are integrating ETFs with other parts of their capabilities,” highlighted one panellist. “We are seeing a diversification of ETF liquidity providers which is good ultimately.”

“ETFs shine during volatile instances. When underlying bond markets become difficult, ETF volumes surge, giving the ability to shift risk,” added one panellist. 

ETFs are still a small percentage on bond markets, as noted by panellists. Holistically, the assets under management they cover is relatively small. However, panellists agreed that their usage could be key to boosting liquidity particularly in volatile periods.

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Electronic trading capabilities have led to a major shift away from voice trading, and this has changed the role that counterparties play when they work together. Enhancements seen on the buy-side have lent themselves to more automation on the desk. These have allowed traders to reduce their reliance on the sell-side in the traditional capacity when it comes to smaller and easy to execute flow and focus their efforts on more complex orders and strategies.

In short, the buy-side is relying on the sell-side differently. But that’s not to say they don’t need them anymore. In today’s fragmented environment of platforms and venues, the act of sourcing liquidity has changed. The buy-side is therefore increasingly leaning on sell-side relationships to ensure access to all relevant liquidity pools and to guarantee best execution is achieved for their end clients. With this, sell-side firms are diversifying their offerings to meet these shifting demands.

“The buy-side pay all the bills in the industry – they decide whether they self-execute or execute through the sell-side. The decision process, in reality, is always with them. The more confidence the buy-side has in executing trades, the more the shift will continue,” argues Keith Todd, chief executive at Trading Technologies. 

“There are, however, occasions where even if you’re a sophisticated buy-side trader, you may choose to use the sell-side because it gives you different windows and access to the market.”

Technology isn’t the only differentiator, Todd adds. “It’s training, experience and the circumstances.”

Evolving reliance on the sell-side

Buy-side reliance on the sell-side has shifted thanks to the rise in a more independent and data-driven approach to decision-making. Advanced analytics, direct market access, and AI-powered tools have given buy-side institutions the ability to carry out functions traditionally handled by the sell-side, such as research and trade execution. 

“Already electronic execution and direct market access has reduced the reliance on sales traders to source liquidity,” emphasises Scott Chace, head of trading for portfolio solutions at State Street. “Artificial intelligence will likely cause an increase in the use of sophisticated technology where traders’ jobs are supplemented by machines and trades will simply be monitored by human traders. The reliance of traders as we know is likely to reduce over time as one trader will be able to efficiently handle a large number of transactions.”

In some cases, this shift of duties has reduced the buy-side’s reliance on sell-side expertise, allowing for greater autonomy in investment strategies. As a result, the sell-side has begun to offer value-added services, including bespoke analytics and strategic advice. 

“As markets continue to increase broadly in complexity, buy- and sell-side relationships can and will take on a more strategic focus. What I mean by that is, it’s really important for both sides to understand priorities,” says Ed Wicks, head of trading at Legal and General Investment Management (LGIM).

“If you get it right, it allows both sides to understand the direction of travel that each other are taking and ensure they’re able to commit appropriate resources to given technology initiatives.”

To be clear, increased technology does not necessarily mean the buy-side relies on the traditional sell-side less, roles have simply evolved. The key strengths of the buy- and sell-side are completely different, and despite there being some overlap among firms, each organisation will focus on where it can add the most value. 

Another key driver of this adaptation is the increased presence of additional liquidity providers within the landscape. Paired with the reduction in balance sheet seen by the traditional sell-side in recent years, the establishment of these more technologically focused liquidity providers has intensified this decrease in reliance on the traditional sell-side in some capacities. 

Technological advancements are also bolstering peer-to-peer interactions among buy-side traders, through the possibility of more direct, efficient, and transparent communication and trading through decentralised platforms and advanced networking tools.

Jason Fromer, managing director, co-head of global fixed income trading at Manulife Investment Management, emphasises that credit traders are certainly benefiting from the growth of buy-side to buy-side, or “all-to-all” trading on a few specific platforms. “The additional pocket of liquidity certainly helps us get trades done and participate in the market in a way we could not a few years ago,” he notes. “We view this as a complement to broker led avenues of liquidity, not as a replacement.”

With electronic trading comes the added benefit of requiring less time to be spent on small trades. As a result of this, traders are left with increased capacity to focus more on executing larger orders and value-add idea generation for portfolio managers. 

“The biggest potential negative [however] is that it reduces the overall touch points with the sell-side, possibly leading to weakened communication and relationships with sales and trading desks,” adds Fromer. 

Less communication with the sell-side comes with the potential reduction in establishing valuable insights and relationship-driven benefits, which may negatively impact decision-making and market intelligence.

Echoing this, Will Winzor-Saile, managing director, execution analytics and architecture at Redburn Atlantic, notes that with fewer orders being received by the sell-side having a human element to them, this often means more of a quantitative focus on performance rather than service or content. “When managed well this adds a new dimension to the relationship, another point for discussion and collaboration,” he argues. 

Trading desks and their make-up are subsequently continuously shifting, with technological advancements being a key driver for their change. “Head counts are evolving, as opposed to reducing, to meet the new needs of an organisation,” as Wicks highlights. 

A way in which trading desks are keeping up with the pace of technological advancements is by maintaining a degree of nimbleness, allowing them to evolve and adapt to the changing needs of clients and organisations. However, with these advancements, practical skillsets should not be compromised or taken for granted.

“Many firms, particularly the large sell-sides focused purely on flow, will use technology as an excuse to juniorise or shrink a team. All this does is offset the technology gains meaning that you’re offering the same – or more likely, worse – service to your clients,” warns Winzor-Saile. “Having a quality, experienced team will always provide a better service than pure technology alone.”

For trading teams to be able to coexist and align with technological advancements, shifts do have to be made. Be it through diversifying the required skillset for a desk, shifting focus more onto monitoring, or creating more space to develop relationships. 

To onboard or not to onboard

With the growing availability of technology, the challenge today lies in integrating the plethora of systems and platforms now on offer. If various counterparts are utilising different trading platforms, chat systems or voice networks, it can be extremely difficult for all participants to get a full view of what may be occurring in a specific trade. Interoperability is therefore becoming increasingly key.

“Once these technologies open up and allow the sell-side to share insights directly to the systems the buy-side are already using, all sides will see a big increase in productivity,” highlights Winzor-Saile. “This interoperability then allows things like IOI networks and block-matching tools to integrate much more seamlessly into existing workflows.”

With so many different vendors out there and technology providers offering a wide range of solutions, buy-side participants must be mindful when choosing the right ones for their desks. This all depends on what an institution’s underlying demands will be. Adopting new technology comes with a hefty cost and processes can be time consuming to ensure appropriate and successful integrations. 

“It’s expensive to onboard [new technology], particularly because there’s always a new product selection process we need to go down and then there’s a lot of legal work that we need to get in place,” emphasises Cathy Gibson, global head of trading at Ninety One. “We have a responsibility to back the vendors that we think are going to be additive to our industry and sometimes we’ll win, but sometimes that will not be the case.”

While many new technologies come to market every year which many buy-side traders may consider as an added complexity to their day-to-day activities, there remain areas where traders are eager to see more technological development. Namely, primary issuance – the process in which new securities are created and sold to investors for the first time. 

Although technology has streamlined a number of components linked to primary issuance, such as document preparation and data management, the complexity and need for human judgment has slowed down the pace of this becoming fully automated.

“Technology that is yet to really take off is an effective primary market workflow tool,” says Wicks. “New issue processes remain stubbornly manual and there’s already so much manual and voice interactions between the buy- and sell-side. This is an area where technology could and should help the buy- and sell-side to make this whole process more efficient.”

Maintaining relationships

Fostering personal relationships in a tech-driven world is essential to promote transparency, collaboration and market resilience. It is of huge importance that a bond of trust is established among counterparties to ensure relationships can grow. 

“Real-time responsiveness 24 hours a day is most important and tech tools enable that,” argues Chace. “But they also promote transparency which is key to trust building.”

For a buy-side institution to transfer execution to a sell-side broker to execute on their behalf, there needs to be trust. Today, it is essential that these interactions are cemented by data and demonstrated by proof of trade execution on a best execution basis, as opposed to simply being based purely on pre-existing relationships. 

“If a buy-side institution is becoming more automated and measuring brokers quantitatively then it’s essential that their execution goals are well understood by the sell-side and this can only be achieved through transparency and regular communication,” says Winzor-Saile. “Knowing what information is useful to the buy-side requires in-depth knowledge of their trading style and goals which is very difficult to automate.”

With increased adoptions of technological advancements, buy-side users also have to be more mindful about market resilience and maintaining stable markets. For the buy-side, having a range of sell-side counterparties can help reduce the likelihood of being impacted by any issues related to faults in technology. More specifically, ensuring that sell-side counterparts are not all using the same technology or trading strategies is paramount to reduce domino effects in a breakdown event. 

“As the early days of Covid demonstrated, sell-side traders are an integral part of maintaining and cultivating partnerships, and ensuring access to breadth and depth of market liquidity during bouts of volatility,” notes Fromer. “A trading desk cannot rely on just one. It needs to assess the environment and specific trade before executing to ensure the best outcome for the client.”

However, for effective transparency to be achieved it is essential that technological advancements do not lead to the overstimulation of buy-side counterparts. Despite such activities coming with pure intentions, they can become counterproductive as they either require additional screen space or lead to spamming users. 

“It is vital to understand the importance of quality over quantity. As a sell-side we should only send the buy-side information they care about, ensuring that it is clear and concise – that is best achieved by combining both human and technological approaches,” says Winzor-Saile.

In addition, technology can aid more positive engagements with second line risk and compliance colleagues. New advancements also enable the buy-side to benefit from straight through processing in the trading process, a key benefit for large trading desks. 

The continuous advancement of technology is proving to be helpful in streamlining various trading processes, alongside helping bolster efficiency. The adoption of technology is undoubtedly resulting in shifts in the way the buy- and sell-side interact.

However, the value of these two separate counterparts is still proving key, despite an evolution in the way in which these two parties cater to each other. 

The post The evolution of the buy- and sell-side relationship appeared first on The TRADE.

The trading event of the year is set to return once again at The Savoy on 7 November, bringing together our industry for a glittering evening of celebration and jubilation.

Today we are announcing our survey awards, bestowed on the back of a record number of responses to the TRADE’s Algorithmic Trading and Execution Management Surveys for 2024.

Alongside these, The TRADE is excited to reveal the Editors’ Choice Awards for 2024, recognising excellence from all corners of the capital markets industry, including exchanges, trading venues, technology and data vendor services and more.

Buy-side, Industry Person of the Year and Innovation Awards will follow in the coming weeks.

A huge congratulations to all of our shortlisted nominees, see you in November! 

Algorithmic Trading Awards shortlists:

Best Trading Performance

Berenberg

BNP Paribas

Jefferies

Redburn Atlantic

Best Access to Market

Berenberg

BNP Paribas

Redburn Atlantic

Virtu Financial

Best Price Improvement Capabilities

Berenberg

BNP Paribas

Citi

Redburn Atlantic

Best Client Service

Berenberg

Jefferies

Redburn Atlantic

Stifel Europe

Best Dark Pool Capabilities

Berenberg

Jefferies

Redburn Atlantic

Virtu Financial

Best User Experience – Large Clients

Citi

Goldman Sachs

Morgan Stanley

UBS

Best Provider – Hedge Funds

BNP Paribas

Citi

Jefferies

RBC Capital Markets

Best Provider – Multi-User Clients

Citi

Goldman Sachs

Jefferies

Morgan Stanley

Best Provider – Large Clients

Citi

Goldman Sachs

JP Morgan

UBS

Execution Management Systems Awards shortlists:

Best Market Access

LSEG TORA

Instinet Newport

Neovest

Virtu Triton

Best Platform Reliability

LSEG TORA

Instinet Newport

Neovest

Virtu Triton

Best User Experience

LSEG TORA

Instinet Newport

Neovest

Virtu Triton

Best Multi-Asset Capabilities

FactSet’s Portware

LSEG TORA

Neovest

Virtu Triton

Best Provider – Large Clients

FactSet’s Portware

FlexTrade

Instinet Newport

Virtu Triton

Best Provider – UK & Europe

Charles River

FlexTrade

TS Imagine TradeSmart

Virtu Triton

Editors’ Choice Awards shortlists:

Outstanding Exchange Group

Cboe Europe

Deutsche Börse

London Stock Exchange Group (LSEG)

SIX Group

Outstanding Dark Trading Venue

Liquidnet

POSIT – Virtu Financial

SwissAtMid

Sigma X – Goldman Sachs

Outstanding Fixed Income Trading Venue

Bloomberg

ICE BondPoint

MarketAxess

Tradeweb

Outstanding FX Trading Venue

Bloomberg FXGO

FXall

LMAX Exchange 

SGX FX Systems

Outstanding Derivatives Trading Venue

Cboe Europe Derivatives (CEDX)

EBS UK MTF – CME Group

Eurex

Euronext

Block Trading Venue of the Year

BlockMatch – Instinet

Cboe BIDS Europe

Liquidnet

Luminex

Clearing House of the Year

Cboe Clear Europe

Euronext Clearing

ICE Clear Europe

LCH

TCA Provider of the Year

BestX

IHS Markit – S&P Global

ISS LiquidMetrix

Virtu Financial

Outstanding Market Data Services Provider – Equities

big xyt

Deutsche Börse Xetra

FactSet

LSEG Data & Analytics

Outstanding Market Data Services Provider – Fixed income

AxeTrading

BondCliQ

Neptune Networks

Tradefeedr

Outstanding Non-Bank Liquidity Provider

DRW

Hudson River Trading

Optiver

XTX Markets

Outstanding Trading Technology Provider

360T

Edgewater Markets

FlexTrade

Trading Technologies

Sell-Side Market Structure Excellence

Anish Puaar, head of European equity market structure, Optiver

Hayley McDowell, EU equity electronic sales trader and EU market structure consultant, RBC Capital Markets

John Fruen, head of EMEA market structure and liquidity strategy, UBS

Belinda Mar, equities, market structure and product development, Bank of America

The post The TRADE announces Leaders in Trading awards shortlists for London event appeared first on The TRADE.

Francisco Oliveira

Announced internally this week, the bank is set to “create scale” by consolidating its fixed income divisions into one global business line for Fixed Income, Currencies and Commodities (FICC).

Arne Groes has been appointed as the global head of FICC, effective 1 October.

“In order to create scale across fixed income activities, we have announced the creation of a single Fixed Income, Currencies and Commodities (FICC) global business line. This will allow us to offer the most comprehensive and innovative solutions to clients as we continue our strategy to become the number one European markets house globally,” said BNP Paribas in a statement.

“Francisco Oliveira […] decided to pursue new opportunities outside BNP Paribas. Over a 20 year commitment to the bank, he played an instrumental role in driving the success of our Fixed Income business and we wish him all the very best with his future endeavours.”

Oliveira originally joined BNP Baribas as part of its corporate and institutional banking division in 2017 as deputy head of Hispanic, LATAM CIB.

Since joining he has served in a number of roles across FX, commodities, local markets and global credit, rising through the ranks to his most recent role as global co-head of global macro and global credit in 2022.

Prior to joining BNP Paribas, he served for almost a decade at Credit Suisse as its co-head of Brazil FID based in Brazil.

The post BNP Paribas macro and credit global co-head departs following fixed income rejig appeared first on The TRADE.

Historically market structure in foreign exchange (FX) has lent itself to ISDA-based, direct bilateral trading, meaning buy-side firms – in particular real money firms who don’t have the capabilities to use a prime broker model – are often locked into these relationships with banks based on credit lines.

However, buy-side institutions have become increasingly keen to diversify their access to liquidity outside of these relationships. And this has only been exacerbated by the introduction of new liquidity providers into the market, a reduction in warehousing by banks in recent years and market volatility on the back of macro events – such as the Yin carry trade unwinding in recent weeks.

“What if a bank channel is blocked?” said Tjerk Methorst, senior trader manager at PGGM. “We then need a new route. My role is to ensure tooling is sufficient to access liquidity via different routes.”

Given the challenging environment participants find themselves within, traders have become increasingly keen to explore how new liquidity providers and sources could help the industry to better prepare for similar events in the future.

However, in order to do so the untangling of liquidity and credit must take place, panellists said, speaking in discussions exploring various solutions including peer-to-peer liquidity and the prime brokerage model used by by hedge funds.

“Historically speaking, market structure has required two things to happen in bank relationships and those are pricing and credit. Without both you’d have no relationship and no liquidity,” said Jay Moore, co-founder and chief executive officer of FX HedgePool, a peer-to-peer liquidity platform.

“Hedge funds can access deeper and more specialist pockets of liquidity through prime brokers, but the real money space is not in the prime broker world because of the complexity of their fund ranges. A prime broker at the centre of their credit universe doesn’t make sense.”

He also noted that given real money asset managers are reliant on the ISDA relationships that they have this can sometimes be limiting to what they can access.

“You might have a fund manager with 15 banks on the panel but perhaps not SEB and they want to access specialised Scandinavian liquidity but they can’t today,” added Moore. “Asset managers should be able to access the best liquidity in the world. Separating credit from liquidity will open up specialist LPs [liquidity providers] to help where needed most.

“Big banks want to do more trading but they’re capped out at capacity. This is where other specialised providers come in with other pockets of liquidity. The credit story is changing.”

New protocols and greater transparency were called for by panellists in order to overcome this reliance on traditional providers and “bridge” the gap amid the decoupling of credit and liquidity.

“It’s about new protocols. All to all will increase transparency. Decoupling [liquidity and credit] will mean a better price for both parties,” said Alvin Chopra, chief operating officer and co-founder at SpectrAxe, an all-to-all FX options trading platform.

“Banks are crucial. They’ll make money elsewhere. It’ll be a migration from risk transfer services to algo trading. The client to dealer relationship will be better.”

Methorst concurred: “This will spur innovation in other ways to solve credit through platforms.”

New liquidity providers

Given the shifting dynamics, panellists speaking this week explored the potential for new liquidity providers. The overall conclusion was that while new liquidity sources are of course desired, ensuring that relationships are meaningful enough to prove fruitful is essential. Finding the “right mix of liquidity providers” is paramount, but the question is, what is that?

“More liquidity providers is not the way to go,” said Jonas Virtanen, global head of spot trading at SEB. “You need fewer but stronger relationships and you need to make sure it works for both parties at all times. The client also needs to behave as the taker and look after liquidity.”

Panellists were united in their stance that communication is central to maintaining the strong relationships required in today’s environment. Like Virtanen, Anthony Brocksom global head of sales at FX Spotstream reiterates that this is the responsibility of both the liquidity provider and the client.

“You want a liquidity provider to take the call. You need open dialogue. Clients have to behave too,” he explained. “They have to be honest with how they’re going to be trading. For example, if you tell them off the bat you’re going to sweep the book then they know to expect it.”

When asked how a participant might go about identifying a new liquidity provider to use, speakers agreed that having a natural franchise connected to it would make it favourable.

“Is there a franchise behind it that makes sense? Non-bank LPs don’t have the same shape for them you have to ask what’s the model? What drives the additional benefit?” said Sam Johnson, managing director at iSAM Securities – a new liquidity provider.

“If the story makes sense, it’s compelling. Clients need more novel analytics tools that simulate the market. We need that dialogue.”

The post Untangling credit and liquidity in FX appeared first on The TRADE.

The completion of the transaction is subject to regulatory approval and closing conditions. StoneX will acquire 100% of Octo Finances SA shares once complete.

The move is designed to expand StoneX’s capabilities in fixed income and grow its presence in Europe, with a particular focus on France.

 “This acquisition further expands our growing distribution network by over 500 clients, including banks, insurance companies, private debt funds, mutual funds and private wealth managers,” said Anthony Di Ciollo, global head of fixed income at StoneX.

“Octo Finances is a highly respected French brokerage firm known for its excellent client service. We are committed to fully supporting its growth and extending our products and capabilities to its high-quality client base.”

Fixed income broker Octo Finances is in Paris. It specialises in bond and convertible sales, debt capital markets and credit research.

 “Joining StoneX is a natural fit for Octo Finances,” said Talabor Szabo, chief executive and co-founder of Octo Finances.

“StoneX’s commitment to innovation and client service aligns perfectly with our values and vision for the future. We are thrilled about the new opportunities this acquisition will bring and are eager to work together to enhance our offerings and grow our presence in the market.”

StoneX has been ramping up its fixed income offering with several new hires in recent months, most likely in preparation for its upcoming deal.

Among the new hires is former head of trading at Incline Global Management, Evan Halpern, who was named managing director of fixed income outsourced trading in January.

More recently, StoneX Group appointed Simon Pickworth – former MUFG – a s an institutional fixed income trader for the Central and Eastern Europe, Middle East and Africa (CEEMEA) region in April.

The post StoneX to acquire fixed income broker Octo Finances appeared first on The TRADE.