Tell us about your journey to become co-head of foreign exchange for EMEA at BNY Mellon
It all began with me being lucky enough to gain one of two places into the dealing room on a graduate program over twenty years ago. Over that time, I have traded and managed trading businesses across most products in fixed income and foreign exchange. I have had the privilege to experience many different cultures and time zones, having worked in Sydney, Wellington, Hong Kong and London. I have also worked on different types of trading desks ranging from full-franchise to proprietary trading.
I have seen many significant moments in history. I still remember coming into the office the morning after the tragic 9/11 attacks to inter-bank price-make Kiwi interest rate derivatives – with at that time the NZD rate market being one of the first (rates markets) to open after the attacks given the global time zones. The entire world was shaken and I recall the CEO was standing behind me as the market opened and the phone board lit up with other banks calling for a price. This has always stayed with me. Or the relentless intensity during the global financial crisis and the period with which it unfolded. The one constant over my career was the need to evolve and always look to optimise my trading process.
With increased automation of pricing via eFX, how is the role of the trader shifting?
Traders used to be very focused on a small area of a product (for example, you’d have a JPY spot trader), but now with eFX and the machine price comprising the vast majority of the flow, there is less needed to focus on directly market making, allowing sell-side traders to be much more involved in the overall growth of the business. This can be from a client interaction perspective (the growth of the implicit sales/trader role) or from a more technical perspective (lending their market knowledge to help the quant/tech teams deliver items which are relevant to our client base). There is an increased need to be proactive in delivering thought leadership and content into the salesforce and clients to establish consistent client interaction. We must have awareness of individual client requirements to be able to deliver axe interests in a targeted and relevant way to add value.
What are the key pain points associated with low touch trading and how do you navigate these?
As there are a lot less traders now, there are a lot more products to cover and so it can be difficult to focus as much on the microstructure of the market – however, appropriate tooling and analytics help massively here. With the majority of price making done by algos in spot, liquidity has become progressively less stable over the years; this is especially apparent during volatile markets with low participation, fortunately voice market makers are still here to be able provide a service during those times.
Low touch trading increases the potential for a fall in client volumes to be unidentified for a longer period of time. This can be addressed via regular and consistent analysis of client request/trading data.
What changes in market structure are you most conscious of for 2024?
The US equity settlement changes to T+1 at the end of May is top of mind for our non-US clients. This will reduce the trading timelines for clients to execute FX to settle US equities transactions and is expected to lead to a significant increase in same day value FX transactions, with a major knock-on impact being that these trades cannot be settled in CLS. We are engaged with our clients to offer solutions to ensure efficient and timely execution of FX to settle US equities trades both via automated solutions within our program trading solutions and our sales and trading offering. Spot is close to being fully covered electronically; however non-spot still has a lot of scope for electronification. There has been a big rise in liquidity being provided in NDFs via the ECNs over the past couple of years and now we’ve seen a big push from various firms into improving the visibility of pricing in the OTC FX Swap market, which would allow firms to start automating elements of their risk management and providing execution algos for non-spot instruments.
What are some tactics/strategies to promote mental and physical well-being that helps with being a trader?
Maintaining physical and mental well-being is crucial to trading. I always try to optimise everything that is within my control to improve my trading performance. Diet and keeping physically fit helps tremendously with stress management and staying mentally sharp. I exercise every day as soon as I wake up and I can see the difference to my mood if I skip a couple of days. Mindset is very important for my trading process. Sleep is also crucial. I look to go to sleep at the same time every night with a full eight hours of rest.