From studying international relations in university to the trading desk, Imogen Hepsworth of Federated Hermes shares her journey into the complex world of trading and the key lessons learned along the way. Speaking to Trader TV, Hepsworth highlights the importance of building strong relationships and how her knowledge of platforms has shaped her skill sets. She also reflects on the rapid electronification of the credit market, the importance of data-driven tools today, and how these shifts are redefining the role of the modern trader.
Interview
Josephine Gallagher – So, tell us a little bit about your journey and how you made it onto the trading desk?
Imogen Hepsworth – Yes, for sure. So, going back to university, I studied international relations at university, so not a finance degree, and then from there I wanted to go more into the tech space. So did a few internships and work experiences in the tech space through university, and after I joined MarketAxess, the trading platform, where I was there for just over four years. While I was there, I worked in a few different teams, so I started working in operations, and then moved into the open trading all-to-all space. So from there, I definitely got a broad understanding of trading and then had the opportunity as well to build relationships with clients on the platform. So from there, I eventually transitioned into a trading seat at Federated Hermes, where I’ve been for just over two years.
Josephine Gallagher – Really interesting, and so what kind of learnings did you take from working at a platform provider to the trading desk itself?
Imogen Hepsworth – Definitely a few, as I mentioned, I didn’t have a finance degree, so having sort of that basic understanding of the financial markets was very beneficial, learning that at a platform, and then also seeing how the client side and dealers, as well as alternative liquidity providers interact on the platform was very beneficial to understand that relationship and sort of the basics of credit trading. In terms of the individual products as well, it was great to sort of have that foundation moving into a trading seat. So seeing how the individual buy side would interact with products versus that of the sell side. And one example being utilizing the all-to-all space. So moving into a trading seat, being able to be a liquidity provider was very beneficial, and then lastly, I would say, learning a lot from colleagues working at the platform, so a lot of ex-traders or individuals who had been in the industry for a while. So picking up on their experiences and their advice definitely helped when moving into a trading seat. .
Josephine Gallagher – And how important is that relationship component to the trader, particularly amid the current volatile market backdrop?
Imogen Hepsworth – Definitely very important, and as a junior trader, it can take a bit of time to build on those relationships. So coming from the platform side and having a bit of that network already definitely helped with that transition. But as you mentioned, within volatile times, and we’ve seen quite a bit of that this year so far, they’re definitely very, very important, and it’s definitely the time when you need to call up and have a conversation directly, whether it be in times of illiquidity or in times when you need a bit more market colour and so I would say really leaning on those dealers in times of volatility can be very crucial.
Josephine Gallagher – So junior traders and traders are also under a lot of pressure to perform in itself, and fixed income itself is very much reliant still to the state on those relationships. But how do you measure those relationships, and is Federated Hermes doing anything interesting or unique when it comes to their TCA (transaction cost analysis) processes?
Imogen Hepsworth – Yes, we definitely look at it on a qualitative and quantitative basis to sort of measure those relationships. So as you mentioned, TCA is a big part of our workflow. We have in-house TCA, and we have a monthly email that goes out, which shows us our TCA from that past month, and then quarterly calls as well, where we can really go through and see how we work with different counterparties and interact with them, as well as the different platforms and even the different products on the platforms. So, definitely leaning a lot on TCA. I would say with the qualitative side, we definitely do that on more of a team basis. So, being a more junior trader and really trying to build out those high-touch, maybe more voice trading skills. So definitely as a desk, we sort of rely on each other, and definitely lean on the other members of the trading desk to sort of build on that and continue to learn and grow and sort of monitor that as a team.
Josephine Gallagher – There’s a lot of progress that’s been made in the last few years in terms of, you know, the electronification of credit markets. In the past two years of your time at Federated Hermes, what interesting changes have you seen in the electronification of credit?
Imogen Hepsworth – Definitely seen a few. I would say, continuing on the theme of volatility, those relationships are very important to lean on during times of volatility. Also, when you need to execute something quite swiftly. I would say the platform use in times of volatility has improved, so that sort of ties into the algos and their ability to price and more competitively during this time. And also in terms of automation, as that technology continues to grow, being able to utilize that in times of volatility can be very important. Also, within the automation space so feeling more comfortable as the technology continues to grow within that space, feeling more comfortable relying on automation during those uncertain times. And that also ties into the automation piece, relating to more iliquid credits as the technology grows. I’ve definitely seen that improve over the past couple of years. And then the last thing I would say is in terms of the sizes that the buy side are more comfortable putting on the platforms, that has definitely increased over the past the past couple of years, and believe it will continue to, to continue to grow.
Josephine Gallagher – So there is a very steep learning curve when it comes to working in finance and particularly on the trading desk. So, for anybody interested in this kind of career path, what advice would you offer them?
Imogen Hepsworth – There’s such a broad range of skills that you need to become a trader, and so the advice that I would give is to not necessarily focus on the maybe more traditional route to become a trader. I think what I’ve learned on the desk that having diverse and maybe different ideas can be very beneficial to the desk as a whole, as it really is a team effort. So there are so many different skills that you can learn from different teams, whether it be in finance or more in the technology space. So I would just say, be very open to working with different teams and continuing to learn. And then the other thing I would say is really leaning on your network and continuing to grow that and continue to just try and seek as much advice as you can from others. I think, really working together and working as a team, so no matter what team you are in at the moment, if you do want to transition, there are definitely transferable skills or important things that you, that you’re learning that will definitely be helpful later on.
Josephine Gallagher – Thank you very much, Imogen for joining us. Thanks for having me.
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