Co-head of global execution strategy at Fidelity Investments, Ashley Banfield, tells Laurie McAughtry about her journey from elite ice hockey athlete to trading superstar. We talk about why size matters when it comes to liquidity; why automation is only as good as the trader behind it; why authenticity is so important… and why she really likes having lots of screens.
From the ice rinks of Toronto…
Ashley Banfield grew up in Toronto, spent four years of college in Boston (Harvard, majoring in Economics), eight years in New York (including a quick MBA at Columbia), returned to Boston with Fidelity, and is now talking to me from sunny Florida – where she’s taking advantage of Fidelity’s flexible working dynamic to enjoy some warmer weather. She might have reached the top of her game, but she’s refreshingly open about how she got there.
“I wish I could tell you that I started with this vision of my career, but that couldn’t be further from the truth,” she admits. “When I was in college I had no idea what I wanted to do, and one of my ice hockey teammates (Mina Pell Mitby) suggested finance. I had the opportunity to visit Morgan Stanley’s equity trading floor and was just immediately drawn to the energy and the fast-paced environment. The flashing screens, the noise – it just looked like so much fun.”
Head of the programme George Van Amson took Banfield under his wing – and she never looked back. “One of the most important things I learned that summer was that a lot of the things I really enjoy in life – competing, being part of a team, playing poker, strategic board games – translate really well into the world of trading. And then, it sounds cheesy, but the work really inspired me. I also thought having three screens was the most amazing thing – I guess it doesn’t take a lot to get me excited.”
Early learning
Banfield was immediately fascinated by markets and by the amount of information she could access. “I would come in on weekends – which gives you an idea of how cool I was (ha!) – and build custom tools in Bloomberg and excel VBAs. I was totally hooked from the early days. The other part that inspired me was the people – they would dedicate time to helping me understand how they thought about risk, pricing, and the art of block trading – I still have notes I took from those conversations so never underestimate the impact that a single conversation can have on someone, particularly those who are earlier in their career.”
Banfield spent eight years on the trading desk at Morgan Stanley before transitioning to the buy side with Fidelity. But again, it wasn’t planned. “A role came up, and those seats don’t come up that often, and I had some great relationships over there already, so I jumped at the chance.”
That’s not to say the change wasn’t challenging. “The hardest adjustment was not having a PnL,” she confessed. “That was something I really thrived off, getting immediate feedback every day. So I really had to adjust my thinking from being very short-term oriented to a much more long-term investing outlook.”
The exciting part though, was getting close to the decision-makers and understanding the fundamentals of portfolio construction. “My job became much more about implementing those investment decisions effectively as opposed to generating business and managing that risk.”
Automation trade-off
Banfield started in the business back in 2005, just a few years after decimalisation (2001) and the combination of OTC/Nasdaq and listed desks. “Even at that time it felt like the industry was going through a lot of change, but over the past 18 years that pace has really accelerated.”
One of the biggest changes has been electronification and the availability and analysis of data to drive decision-making. “But at the same time, I think that it actually makes traders more valuable. Our team has really integrated themselves into the investment process and built strong relationships with the portfolio managers and analysts, and they act as their eyes and ears in the market. We’ve seen a lot of automation, particularly around low-risk, rules-based tasks, and that just frees up our team to spend more time speaking to PMs about what they’re trying to achieve with the portfolio.
An interesting development at Fidelity has been through its systematic team, led by John Bright, which has partnered with the firm’s AI Centre of Excellence to design and build a model-driven automated trading system, leveraging AI and machine learning. “There’s a tremendous amount going on, and automation is playing an important role in scaling the business and driving better outcomes,” agrees Banfield. “But it’s still important to have that human element to help shape these decisions. For us, it’s all about building a robust toolset to allow the traders to be more effective.”
Building relationships
That effectiveness starts with continuously improving and evolving the toolset to make sure the team can achieve best execution irrespective of changing market conditions.
“That’s definitely not a trivial starting point,” says Banfield. “There’s an immense amount of work that goes into building out and tuning the algo toolset. It’s also about understanding from a trader’s perspective what the PM is trying to achieve and aligning the strategy accordingly. We try to focus on process as opposed to a singular outcome, and there’s a lot of daily engagement that goes on between PMs and the desk. That’s really where the value of the trader comes in, especially with our sector team, which handles the larger and more complex order flow.
“Within our systematic channel, we were the first to develop algo wheels, over a decade ago. That really helps us better measure and compare broker performance in a normalised fashion. We provide a lot of transparency for brokers around that performance, and we really approach it as a partnership. Our goals and incentives are aligned for us to work with the brokers and help them improve their outcome, which ultimately benefits us as well. We use allocation of order flow as a lever to reward performance.
“Counterparty relationships are evolving under these pressured conditions, and we have seen a gravitation or a concentration level upwards, with the larger brokers commanding a greater share. However, our goal is to have as much breadth as possible. We want to work with anyone who has unique or differentiated liquidity, and we have a counterparty risk team who makes those decisions from a capital perspective. We want to give everyone a shot, we don’t want to miss a call, and we want to position ourselves to interact with the best liquidity out there. But it has been a challenge, that concentration is happening across the industry.”
Liquidity challenges
These relationships are crucial because one of the biggest challenges at a shop the size of Fidelity is liquidity – or the lack, thereof. Size might matter, but being one of the biggest players in the game brings its own issues. “Our demands for liquidity in many cases outstrip supply. So being able to implement trades in an effective manner – where you’re managing information leakage or managing your footprint at the parent level– becomes a real challenge. That’s when the expertise of a given trader becomes so important and so valuable.”
As the complexity of the business increases, that role becomes ever more crucial. “Just as an example, we’re incredibly focused on alternatives right now, strategies like convert arb, risk parity, and hedged equity. Trading has a key role to play as an enabler across so many different strategies in addition to the 40-act business that Fidelity is so well known for. We have to be super effective and co-ordinated. It’s definitely a challenge but also an exciting growth opportunity.
“In Europe, the UK and APAC our liquidity demands, compared to the available liquidity, put us into a really difficult spot, especially given our asset size. In the US we still face that to some degree as well – less so in the large cap, liquid names but once you get down to mid/small cap, we have orders that are far in excess of 100% ADV. Solving for that and making thoughtful, strategic calls, leveraging our syndicate team, doing a reverse enquiry, those are avenues that we do explore. But it’s about implementing the decision not only in a cost-effective manner but in a timely manner. PMs aren’t going to wait 20, 30 days for you to implement a decision. So whether with contra, natural liquidity or even using broker balance sheet, that provision of liquidity is a crucial tool.
Diversity in action
While her preference is usually to remain under the radar, Banfield also recognises that, liquidity metrics aside, her senior position as an LGBTQ+ woman gives her a powerful voice in the diversity space – and it’s one that she feels she has a responsibility to use.
“We believe that a diverse workforce deepens our ability to serve clients, customers and communities because we know that a truly inclusive culture is critical to be successful over the long-run,” she explains. “For me personally, I didn’t see a lot of representation that I identified with in my career or in my trading roles, so I’ve had plenty of experience in being the one and only. That means that as much as I’d prefer to be in the audience of a panel or reading a profile instead of being the subject, I do recognise that being visible is important.”
Much of this comes down to education – a starting point that Banfield believes is absolutely fundamental. “It’s about the funnel of applicants, and that starts at schools. I think many students don’t think that finance is a very stimulating or exciting field or they think they don’t look the part. So visibility is crucial and the more offerings we have around that the better. It’s about widening the pipeline.”
“As far as me inspiring others – I’m not sure. Internally, I try to be a sounding board when anyone on the team has questions or ideas and provide support or resources when it’s needed, but also ensure people operate with a lot of earned autonomy. We have an incredibly talented team and most of the time I’m just helping around the edges, keeping the global team connected, and trying to drive our strategic initiatives forward. Outside of our organisation, I try to be visible and accessible – I take every meeting or phone call that I possibly can – whether that’s from someone who’s interested in the industry or from our sell-side partners, and certainly recognise how hard the street is working for us.”
Playing to win
Fidelity focuses on multi-year planning, so the flip of a calendar doesn’t usually change much strategy-wise, no matter how momentous it might feel. “At a high level, our focus is on continuous learning and interacting. Fidelity has a customer-obsessed mindset and we’re laser focused on expanding the suite of products and wrappers in which we can deliver alpha for our customers.” says Banfield. “More specifically, alternatives and active ETFs are at the top of the list. We get together at the beginning of every year to reaffirm our goals and priorities but those are the two biggest focus areas for us right now.
“It’s definitely going to be a busy year. Busier than 2023, even. We’ve got tons of energy and excitement and we’re just keen to learn new things and develop new products.”
It’s been over a decade since Banfield skated at a competitive level, but even now she takes that athletic ethos with her into the workplace – and everywhere else.
“I love to compete. I love to win. And I love that pressure. Someone once said that ‘pressure is a privilege’ and I embrace that privilege every day. But it’s also so important to recognise that people play different roles at different times. Sometimes you’re star of the game and sometimes it means sitting on the bench. But whether you’re on the ice or not, you have to trust your team. Fortunately for us, we aren’t short on talent!”
These days, Banfield and her wife Emily are more at home on the golf course than on the ice rink, but her thirst for new experiences – and her commitment to keeping it real – has remained.
“I guess more than anything, I’ve just tried to be myself. The term ‘authenticity’ is so over-used but I don’t pretend to be someone I’m not. I don’t have all the answers and I’m still learning as I go, especially around managing teams and being an effective leader, but I think I’m at least relatable, if nothing else.”
Banfield on the SEC’s market structure proposals…
- I think there are still a lot of open questions around the highly inter-connected proposals.
- There is a lot of industry support for transparency related to 605 and I think it makes sense to start there.
- Sequencing is important – so having a yardstick in place before making other changes will allow the industry and the SEC to better assess the impact of those changes.
- There is a real risk in making multiple changes at once – you really lose the ability to measure cause and effect. Coming at this from a scientific, data-driven approach is really important.
- As far as how this impacts the buy side – it remains to be seen. I’d caution anyone who thinks they know exactly how a given change will impact markets, but I guess my primary concern at this stage is any change that’ll reduce liquidity and ultimately lead to higher parent-level order trading costs. Fidelity submitted a comment letter if anyone wants to see more details on our views.
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