Lynn Strongin Dodds talks to Adam Conn, head of trading, and Stephanie Suriyanon, senior trader at Baillie Gifford about Covid‑19, strategic plans and data.
• Adam Conn is the head of trading with oversight responsibility across all asset classes. He joined Baillie Gifford in August 2016 from Baring Asset Management where he was director, head of dealing. Conn began his career in 1985 as a junior trader on the floor of the London Stock Exchange with Scott Goff Layton & Co and has subsequently led dealing teams based in London, Hong Kong and New York. In 1990 he was the first member of the London Stock Exchange to be elected from a non-member firm. Conn is a director of Baillie Gifford Overseas Ltd and of The Plato Partnership. He is also a member of Baillie Gifford’s Mental Health Group and its Multi-Cultural Network as well as a Chartered Fellow of the Chartered Institute for Securities & Investment.
• Stephanie Suriyanon is a senior fixed income trader at Baillie Gifford where she has worked since 2008. She is responsible for executing a range of instruments for the credit, rates & currency and multi asset investment teams. Prior to joining Baillie Gifford, Suriyanon worked in a credit sales role at agency broker Charles Stanley & Co. Late last year, she was also named as winner in the trading category of Best Execution Magazine’s inaugural European Women in Finance Awards.
What are your roles and how have they changed during Covid?
Adam (AC): We were very focused on ensuring that the trading protocols and risk controls were in place as we switched to a work from home environment. One of the last taboos was traders working remotely but I am very proud of how my team has managed. We had all the processes in place. Part of this was down to the fact that we were in the process of setting up a trading desk in Hong Kong and were going through business recovery plans which entail working remotely. This was not tied to Covid but to the typhoon season which is usually May to November.
One of the biggest issues though was not the technology or communication, but the training of new members of staff. They learn much better when it is in person so when we could not work from the office we tried to see, as permitted, as many people as possible on lunchtime walks.
Stephanie (SS): I am responsible for fixed income trading and I had to make sure that our traders were equipped with the right tools so that they were able to communicate effectively with the fund managers. This was especially important during the most volatile times in March and April. We also took the opportunity to look at new trading protocols with vendors to become even more efficient.
Why did you set up a Hong Kong desk?
AC: It is difficult to capture real time liquidity during the day, so it meant asking traders on occasion to work nights from Edinburgh. I did not think that this was a long-term solution for mental health and family reasons. One of our experienced traders went out there and hired a locally based trader with market experience and knowledge. It has been much better for our clients as they can see the flow in real time, and we have doubled our liquidity capture without increasing costs.
Getting back to Covid – how was it different to the financial crisis?
AC: We are fortunate in that we have a very experienced team who have worked in the industry for years. The difference with the financial crisis was that this time around there were no credit worthiness issues. We did not have any counterparty credit concerns as there was not that much leverage in the system. CDS (credit default swaps) spreads did not go to 300 plus where alarm bells would have gone off.
SS: This was certainly different than in 2008 because everyone across the board struggled to get a price. The prices on the screen were unreliable and we decided to take trading off the platform and move to voice in the most volatile market periods. However, we also used all-to-all trading protocols which helped us find liquidity.
How can trading desks be positioned for the post-Covid world?
AC: I think the long-term impact is that this has been a myth buster – that we have to be in the office – and has hastened the move to working remotely. However, it is important to also be in the office because as I mentioned it is better for training and development purposes, while those incidental conversations are hard to replicate. At the same time though, it is good to have the flexibility and I think we will see a mix of the two or a hybrid model depending on people’s circumstances.
Has Covid changed your strategic plans?
AC: We were two years into our five year – 2018 to 2023 – strategic document when Covid happened and we decided to rewrite it with the lessons we are learning. Every person on the team contributed, starting with our less experienced colleagues so they could make their points before more experienced members of our team were involved, which would not happen in a ‘groupthink’ type of environment. This was a very good experience for them. The document still focused on flexibility, greater use of data, succession planning and learning and development but it gave us greater clarity to our objectives.
SS: Part of the plan is also to work even more closely with investment managers. We have always been part of the investment process, but we wanted to be more involved. For example, in the past the fund managers would do all the research and then make the decision as to which bonds to buy and give us a list to execute. Sometimes though it could be difficult to build a position because of lack of liquidity. We decided a better way was for us to do pre-trade liquidity work ahead of them carrying out their research, by suggesting the most liquid bonds in the names they had expressed an interest. We are also looking more closely at valuations, enabling us to highlight bonds we feel look cheap, or expensive, and offer switch ideas.
In general, how can trading desks navigate liquidity and fragmentation in the markets?
SS: I think in current markets, while its necessary to have multiple tools to find liquidity, it is equally important to have strong and quality relationships. Like many others, we took all our trading off platform at the height of the volatility and worked alongside our sales/trading partners to get things done. Fragmentation has been a worry for a while, but in reality, we still only have four main platforms, and thankfully some of them appear to be a bit more willing to explore bolting on newer smaller initiatives than keeping their door closed, this shows they are listening a bit more to their client’s needs.
What are the challenges in multi asset trading?
AC: I do not see multi asset trading as a challenge but as an opportunity. The use of data will only grow in importance across the asset classes. We are working with vendors to develop new tools in order to have greater sources of information coming in during periods of volatility. We all have limited real estate on the desk, and we want to be able to use APIs and open architecture to create datasets such as our new liquidity dashboard.
SS: This is not only for different asset classes but within an asset class. For example, there are all types of flavours of fixed income – US dollar high yield, emerging market debt, CDS, etc. I agree with Adam in that what we are looking for is to have as much as possible in one place on a trader’s desktop. This means good pre-trade information, access to multiple platforms and executable access without noise.
What technology is most relevant to you and what do you foresee for the future?
SS: We were very close to implementing a new EMS (execution management system) earlier in the year, but in the end decided that it made better sense for us to continue building our in-house OMS/EMS. We will be looking to capture direct bank feeds into our OMS (order management system) as we feel this will give us access to the best quality pricing and real time axe data. We will be working with Liquidnet to implement their new primary tool which will make the new issue process a lot more efficient. We are working on enhancements that will allow us to trade more EM IRS electronically, and we are working with a new vendor to capture better data, and designing a tool that will give the traders better access to the data at the point of trade.
Looking ahead, what do you see as the biggest challenges and opportunities?
AC: The use of data will be one of the biggest challenges going forward whether it be for government securities, credit, FX or equities. We are working with our system vendors to improve our data collection to help develop our rules-based trading and with our data analysts to grow our information usage.
From an industry point of view, one of my bug-bears is the affordability of data, and my belief that it should not cost as much. This is more of an issue for smaller firms but whatever happens with Brexit, we are supportive of the European Commission’s moves to develop a consolidated tape at an affordable price.
SS: The challenge and opportunity will be for the trader to have the data at his fingertips at the time of trade.
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