BlackRock’s global co-head of trading, Jatin Vara, has laid out the key ongoing market trends to watch spanning across risk, regulation and technology.
Speaking at the International Derivatives Expo (IDX), Vara noted the redistribution of risk taking, new market structure technology for bonds and the shifting regulatory regime globally on the global macro backdrop as key market developments.
“The redistribution of risk taking is one. Capital efficiencies and ratios are coming under pressure and alternative liquidity providers are becoming more prevalent in the marketplace so we’re paying huge attention to how this all looks across the different products that we trade,” he said.
“Market structure technology and data modernisation are things we’re seeing rapidly change, especially in the bond market over the last two or three years. Broad advances in technology and data processing are allowing for more sophistication in our trading processes and we’re adapting to that modernisation.”
“The regulatory regime is changing in the Europe, the US and the UK. That’s coinciding with significant change in markets. Generally, we’re seeing more spikes in volatility and higher interest rates so there’s a lot more flex in that macro environment. This coinciding with the other themes has created this washing machine of noise.”
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Vara was appointed global co-head of trading alongside Dan Veiner in January, replacing former global head Supurna VedBrat. He now oversees market structure and the buy-side giant’s EU trading platform.
Speaking at IDX on Tuesday, Vara said derivatives were the DNA that the firm’s trading platform was built on.
“What we do today is similar on a different scale,” he said. “One of the big things we have done is implement one OMS – Aladdin – across all trading teams. This puts exposures to work across all teams and enhances market structure.”
The firm typically splits itself up by product and by region with centres of excellence for different areas and best practices across different products, Vara confirmed.
“We try to make sure traders are skilled in looking at things holistically,” he said.
When asked how BlackRock assess both clearing providers and executing brokers, Vara said the criteria ranged.
“Being operationally excellent and having credit worthiness are the two most important things in clearing,” he said. “You need continuous access 24/7, especially given the scope in derivatives. For an executing broker more elements need to be looked at and you need to manage more facets. You need to look at it from the top down and bottom up and employ data to work.”