Inside the Sell Side
Matt Toms
Head of Asia Cash Equity Execution | Barclays
Based in Hong Kong, Matt joined Barclays in 2008 and has worked in equities operations and equities trading before moving from London to take on his current role.
Human interaction will never be completely removed and this has become increasingly evident over the past 18 months.
Q. Tell us about your role and your key priorities.
I run Barclays’ APAC cash equity execution platform and we trade across Asia Pacific, an important region for the firm. In my role, my goal is to deliver extraordinary outcomes for our clients, through the performance of our algorithmic offering. We strive to offer excellent client service through our experienced sales trading practitioners and make Asian equities trading as simple and straightforward as possible.
Q. Share more about why you’re proud of what you do, and what are some of the challenges you face.
I believe making equity execution as efficient as possible allows our clients to scale, reduce costs and free up capacity. In H1 2020, we were able to meet our clients’ needs despite the distributed working environment and record volumes. This makes me incredibly proud to be part of the team. Being there for our clients when brokers were needed most has won us reliability and credibility mindshare. Barclays has top-tier market share in Australia, China, Hong Kong and Korea equities. We are also proud to be among the top three brokers in Japanese equities.
One of the most daunting prospects I faced after my move from London to Hong Kong was the different regulatory regimes in Asia, with little harmonization. That is why we constantly keep our ears to the ground and remain adaptable to changing circumstances.
Resource is also another challenge in Asia, especially with the global pandemic. Retaining and attracting talent to Hong Kong is much harder than before, people are moving home given the challenges around travel, or looking to relocate out of Hong Kong.
The role of High Touch, Program Trading and Electronic Sales Traders is also becoming increasingly blurred as technology allows individuals to wear multiple hats depending on their skillsets or client demands.
Q. Sell-side processes are still very manual today. What needs to be done to eliminate manual errors and bottleneck and how big a priority is this for Barclays?
In an ideal world, the whole trade lifecycle would be fully straight-through processed. However, this relies on perfect data on both sides. Any mismatch in commission, allocation, account setup or value date can lead to breaks and manual intervention.
At Barclays, we have a holistic and homogenous technology stack, using the same sales, trading, confirmation, allocation and settlements systems globally. This helps streamline the front-to-back experience for our clients. Stability is a laser focus for Barclays. Our Quant clients expect us to be able to handle their high-volume, fully automated and complex trades all the time and I’m delighted to say that despite experiencing record volumes in 2020, our systems were able to cope with near zero downtime in Asia.
A process that is still very manual is onboarding clients and KYC refresh. I believe FinTech’s could play a role in being part of the solution complementing banks, rather than posing a threat. A collaborative approach can help banks solve challenging problems, whilst giving FinTech’s a significant, often captive, proof of concept partner.
Q. What role will technology play in the future of trading? How are you leveraging technology to generate revenue? Where do you think things will be 5 years from now?
Technology has opened up opportunities for retail investors; allowed institutional electronic trading at scale across markets and products; and helped create operational capacity for both the buy and sell-side.
I believe the biggest drivers in the coming years will be streamlining the full client journey and the automation of trading in the Fixed Income, Currency and Commodities (FICC) space. Equities have come a long way in the last 10 years. We’ve seen the rise of electronic execution; the automation of capital to clients through central risk desks; and the increasing harmonization of sales traders, across different execution channels.
Having said that, finance remains a service business. Human interaction will never be completely removed and this has become increasingly evident over the past 18 months. Computers and automation helped when traders and salespeople work in a distributed environment, but a video call isn’t the same as face-to-face interaction. When you have a large or complex order, you want to speak with a person, not a bot.
Q. How are the trading and execution desks moving towards higher-value tasks? What are the top trends you see in your industry this year?
The FICC space has come a long way and is ripe for automation. A trader in credit should not be pricing small trades that can be fully automated. This allows them to work on the large, more profitable blocks or more structured and complex transactions. This happened a number of years ago in Equities and is now widespread in Credit.
The role of High Touch, Program Trading and Electronic Sales Traders is also becoming increasingly blurred as technology allows individuals to wear multiple hats depending on their skillsets or client demands. Block, Equity Capital Markets (ECM) and syndication should continue to be a focus as corporates take advantage of the amount of capital in the system and look for transformative acquisitions to diversify their product/country exposure.
Q. What are the opportunities you see in the year ahead?
The opening up of China’s financial markets will continue to be a great opportunity. Investors will be focused on stock loan and financing, derivatives and block trading.
I believe the top three areas that will need to change are China stock loan and financing, where ASIFMA is leading the charge here in relation to uptick confusion; payment for order flow, and misaligned incentive structures of zero commission brokerages; and the monopolization of exchanges and the reliance on the primary exchange, especially in relation to resiliency and fail over.