To describe the past year as “difficult” for traders would be an understatement. The collapse of Lehman Brothers in September unleashed a tidal wave of volatility that sent traders running for cover. Trading strategies were blown apart, the hedge fund industry crumbled and it was touch and go whether the global economy would follow suit.
As if that weren't enough, laws aimed at liberalising Europe's financial markets were adopted, leading to the launch of many execution venues. Managers were faced with grasping the complexities of a new market structure, even as they dealt with the ravages of the worst recession in 70 years. Electronic trading specialists had to guide their clients through the turmoil, and prepare them for a return to the markets. Here we profile the heads of trading at five of Europe's biggest equities trading houses.
Head of European client trading and execution, UBS
UBS led the pack at Financial News' buyside equity trading awards last year, taking four of the main gongs, including best global equities trading house. Allison, the youthful head of the bank's European trading division, puts this success down to an unusual focus on client needs. He said: “The heart of our business is our clients. Each client is unique and as such demands specific coverage.”
Allison joined UBS in 1997 as an options trader after graduating in mathematics from Cambridge. He moved across the pond in 2000 to launch the bank's US exchange-traded funds trading business, returning to London two years later to start up client algorithmic trading. The moves allowed Allison to understand the breadth and culture of the business.
A year into his job, Allison is pushing for greater adoption of technology to address the challenges of sourcing liquidity and managing risk. He said: “A human may be best for pricing large blocks for clients, but a computer is usually better placed to unwind a large portfolio trade.”
He is also looking to capitalise on the changing needs of clients, who are scattered across much of developed Europe. He said: “Many clients have been changing dramatically over the past couple of years, and so has our service to them.”
UBS lost its crown as Europe's best brokerage for equity trading and execution according to Thomson Reuters Extel, although the bank still came a respectable second.
Head of European electronic trading, Morgan Stanley
Gallagher had something of a baptism of fire in his current role, flying into London on September 15 – the day Lehman collapsed and alternative equities market Turquoise launched.
Events have hardly slowed since, but Gallagher has taken comfort from his experience of similar structural change in the US. There, he learned of the pros and cons of market fragmentation, including the problems of accessing liquidity when stock markets split.
He said: “The opportunity to come to London was a no-brainer because it allowed me to leverage my US experience and help Morgan Stanley identify the challenges. The same story is unfolding here, but three or four times faster.”
Gallagher's strategy is to educate clients on how to use technology effectively and ensure they understand the range of available products. He said: “Algorithms take a historical view on markets, and can also be very commoditised.”
That equivocal attitude has not prevented him from launching other algorithms, including Night Owl, which interacts with both lit and hidden liquidity. Gallagher said the trading division had held up well amid the turmoil, seeing fewer redundancies than other desks.
Head of AES sales in Emea, Credit Suisse
Maher joined Credit Suisse's renowned Advanced Execution Services division in New York in 2002 as one of its original members. Before that he served as head of e-commerce and electronic trading at Robertson Stephens, a San Francisco-based boutique investment bank that was focused on technology firms.
The US experience was as invaluable to Maher as to many of his rivals when he made the switch to Europe last year with his wife and three children. Maher took over the European mantle after electronic trading heavyweight Richard Balarkas jumped ship to agency broker Instinet Europe.
Maher has focused on technology and promoting the bank's full-service offering, spanning research and prime brokerage. He said: “Technology is the life-blood of the business. Anything it makes sense to automate, we do.”
The division has continued to invest throughout the turmoil, committing to a multi-million dollar infrastructure investment last November, before pushing into the Middle East in April with services that allow clients to trade directly on stock exchanges in Dubai and Abu Dhabi for the first time. Maher is also moving into new asset classes such as foreign exchange, options and futures.
Credit Suisse surged up the annual Thomson Reuters Extel rankings this year, snatching the title of best European brokerage for equity trading and execution from rival UBS, after coming fifth the previous year.
Global head of electronic equity execution, Deutsche Bank
Deutsche headhunted Flatley from Bank of America in 2006, where he had masterminded a push into algorithmic trading and direct market access after the NYSE moved sharply towards electronic trading.
Flatley has since positioned the German bank to take advantage of its core strengths, including substantial German retail flow and equity finance. He has also sought to profit from the transformation of the European market and wild swings in volatility, using new algorithms and with a focus on market structure and execution coaching.
Deutsche Bank was third in Thomson Reuters Extel's annual brokerage rankings, edging out Citigroup and Bank of America Merrill Lynch.
An accountant, Flatley moved into technology in the 1980s, and has taken “every job in the industry”, including support and product management. Before joining BofA, he spent three years as chief operating officer at Boston-based software company MacGregor, which has been credited with building the first global order routing system.
Flatley said: “There is no college course for electronic trading, so people come from a variety of backgrounds, including technology, sales, exchanges and trading. Those who do well tend to be curious about market structure.”
Head of electronic trading for Emea at Citigroup
Recruited by Richard Evans, the star trader and a founder of the equity trading platform Turquoise, Vensel took on the top job in February after the departure of his boss amid sweeping job cuts.
A Harvard Business School graduate, Vensel served at electronic broker Instinet and US trading system Island before joining Automated Trading Desk, the US trading boutique bought by Citigroup in October 2007. In his current role, he has sought to give Citigroup's electronic trading business a global look and feel, and help clients capitalise on its access to vast amounts of liquidity.
He boasts of Citigroup's experience with smart order routers, and claims to give clients access to the same technology as its own traders.
He said: “We have taken the best algorithms from the US and moved them to Europe, and have also launched our US dark pool, Citi Match, in Emea.”
New clients are emerging in markets such as South Africa and Greece, although the bulk of European trading originates from the UK. Vensel's sales background means he finds talking to clients the most interesting part of the business. He said: “I always found the market microstructure fascinating, and like to discuss where clients see markets going. People have tremendous ideas.”
© Efinancial News 2009, www.efinancialnews.com