Bloomberg’s sell-side order and execution management business hosted more than 100 executives and traders at its New York headquarters last week for two roundtable discussions about what the future holds for the business sales trading.
Bloomberg’s first “New Era of Equity Sales and Trading” conference also hosted the official unveiling of a new research report from Greenwich Associates, titled “Sales Trader of the Future,” which explores the impact of market trends on sell-side sales trading desks as well as how technology can help sale traders deliver high-touch services and insights to their buy-side customers.
Kevin McPartland, Principal, Head of Market Structure Research at Greenwich Associates, opened the event by presenting the results of this research, which was compiled from interviews with 300 buy-side U.S. equity traders , 225 U.S. equity portfolio managers and nearly 20 sell-side trading firms about the U.S. equities market place and the changing role of the sell-side equity sales trader. “The sales trader is not dead – but his role has changed,” McPartland told the audience. “While the major method of differentiation—relationships—has not changed, the definition has evolved.”
“The story is not that electronic-trading tools are failing to attract more flow, but instead that a new breed of sales trader is using high-quality data and analytical tools to make smarter decisions faster, and serve their clients better as a result,” said Geoff Patsch, head of Bloomberg’s sell-side equity and order management business. “The latest technology is helping the sales trader get a trade done efficiently, as well as demonstrate to the buy-side that they understand how market works and the external factors that influence a client’s decision-making progress.”
According to the Greenwich Associates report, the percentage of equities trading that occurs electronically (37 percent) has not changed since 2009, instead, a smarter, more client-focused sales-trading force, coupled with uncertain markets and a complex market structure are prompting buy side clients to pick-up the phone. “Brokers are pricing high-touch trading as a premium service. In a business still largely directed by relationships, putting in place sales traders who are both cost-effective and can prove their value to clients on a daily basis is critical—but the formula today is not what it was in the past,”added McPartland.
Following McPartland’s presentation, two panel discussions featured representatives of leading buy- and sell-side institutions, who discussed the transformation of the sales trading desk, new and emerging client coverage models, the application of automation and predictive analytics and the convergence of multi-product, multi-asset class products.
Technology’s influence on broker differentiation was a major theme throughout the evening, which Bloomberg executives highlighted by demoing a virtual reality installation of the Bloomberg Professional service on the Oculus Rift platform. Also on display for attendees was a customized iPad application that displayed data models using augmented reality. These applications and the active discussion at the event gave traders and other executives a glimpse of the role of the sales trader decades into the future.
Geoff Patsch added “My conversations with dozens of leading traders at last week’s event emphasized the complicated, sometimes contradictory nature of today’s markets. On one hand you have this push for automation of low-touch order flow. On the other, the buy-side is looking for deeper insights, requiring sales traders to become much more efficient at managing and capitalizing on all of the information and data available to them. For people on all sides of the trading process, it’s critical to have a strong partner that understands the market and technology, and can serve the needs of clients. This is something that Bloomberg has been committed to – and remains dedicated – to providing at all times.”