Optimising remote working for traders

Published on 7 April 2020

Remote working is breaking up the physical communication and workflows that buy-side traders and portfolio managers use in the office. To minimise any impact on investors, and to optimise performance, they will need to embrace cloud-based investment and trading systems across the front office. Russell Feldman COO at IMTC gave his expert view on the importance of real-time, collaborative tools in the supporting the trading workflow for investment firms.

About IMTC

IMTC strives to be the most compelling investment management technology platform of the 21st century. The business offers cloud-native software, enabling fixed income professionals to save time and focus on high value work.

IMTC’s NOVA platform provides buy-side firms with data, analytics and portfolio management solutions spanning the entire investment life cycle—from idea generation to trade allocation and everything in between. NOVA streamlines front-, middle- and back-office functions including portfolio construction, risk management, performance evaluation, compliance monitoring and reporting.

IMTC’s global team includes 80+ full-stack engineers who continuously deploy unparalleled enterprise software solutions, servicing investment professionals across the financial spectrum.

Dan Barnes Welcome to Trader TV, I’m Dan Barnes. With me today is Russell Feldman, COO at IMTC. Let’s talk about the way that buy-side traders and portfolio managers are managing their day to day operations, remotely. So, Russell, will a proportion of buy-side traders and portfolio managers continue to vote remotely going forward?

Russell Feldman Yeah, I certainly think so. I don’t know exactly what that looks like, but there are new technologies that are being developed now as we speak to record home call conversations. Firms have changed policies to ensure that traders can trade from home. And I think places like the stock exchange, which obviously was a powerhouse 50 years ago and has changed a lot even before the coronavirus, now has become more of an event space and it may remain that way. So I think this changes for the better, frankly, because we allow traders who are highly capable and located in places that aren’t Wall Street, like Louisiana or Texas, to be able to trade effectively from the comfort of their own homes.

Dan Barnes If buy-side traders and portfolio managers are using cloud-based systems versus non-cloud-based systems. What difference does that make to them, right now?

Russell Feldman A huge one is mobility; allowing folks to log in from the train or from the car or from their couch that’s just, all you need is a browser. And that is a tremendous benefit. Additionally, cloud tech is able to be deployed continuously. New features, new functions, are things that can be rolled out instantaneously to those fund managers, and therefore they’re working off of the latest and greatest, and so that’s obviously going to benefit the end investor. Additionally, costs are a big one, so cloud tech is pay as you go, and therefore the firms are going to save costs as it relates to investing in servers and cloud technology in general. There are other things like collaboration and efficiencies that are created through cloud tech that are important. A simple example is when we used to save down word documents, V1, V2, and then you send it to somebody else, they save it down and send it back. We’re now collaborating on the same document, and the same goes for trades in the market. When you’re marking up a trade, you want other traders or PM’s to be able to opine on that in real time, and those are some very specific benefits that a trader or a PM would receive from cloud tech.

Dan Barnes Typically, there is a lot of back and forth between the trader and the portfolio manager, especially in volatile markets like we’ve seen. Trying to replicate that when they used to sit in close approximation physically when they’re very remote must be very challenging indeed?

Russell Feldman Super challenging, and we heard from a lot of our clients on the buy-side and other professionals in the space, that there were some major dislocations in the market; the first work from home week as a result of COVID-19. And I think a lot of that can be attributed to the fact that folks were not sitting next to each other, they couldn’t stand up and give indications of interest. So I think what happens is when you’re thinking about trading on the desk and looking at the aggregated risk that’s out there in the market, being able to understand what that looks like in real time is crucial. And so, a lot of folks were risk off for that first week and just pulling back, because they couldn’t get that full picture. Things like putting on a hedge weren’t as simple as standing up and asking Joe if they could help you out on that – you had to message them, and if he had to grab a glass of water for his daughter, he may not respond.

Dan Barnes How do buy-side firms remain resilient, particularly as there was declining margin business in a corona-virus environment?

Russell Feldman I think adoption of new tech is certainly one of the big pieces. One of the things we talk about a lot with our clients is, this rotation that happens from active to passive is more pervasive than that. Asset managers and managers in general need to find ways to add more alpha and/or lower their fees. And we certainly believe that happens with technology. So thinking about being able to aggregate those risk metrics and get an understanding of exposures in real time, and being able to collaborate effectively in real time, is going to be crucial for firms that are going to be successful going forward. And some firms that are looking at this, from the perspective of we can build this in-house, other firms are thinking about this from the perspective of partnering with technology vendors, and others still are kind of staying the status quo. And I fear that the latter is really going to run into a substantial number of challenges over time.

Dan Barnes Do you think the adoption of cloud-based systems has become prevalent on Wall Street already, or is that something which is going to happen now?

Russell Feldman I think there’s a lot of talk about it now. I’ll say there aren’t a ton of cloud-based systems in the market. I think COVID-19 is an unfortunate wake up call for a lot of folks in the operations space, and the technology departments, understanding that there is definitely a need for a switch here. And I think a lot of the large, big players in the space know they need to pivot to cloud technology. They also know that that’s a huge list. And so, there is certainly a challenge here between firms that know they need to make that change, but that are a little bit wary of that, because it’s not what they’re used to. And the technology vendors who need to transition to provide in cloud tech that aren’t already there, and knowing that that’s a big scale project and a major undertaking, that they’re going to have to look into in the next few years.

Dan Barnes Russell, that’s been fantastic. Thank you.

Russell Feldman Thank you, Dan.

Dan Barnes I’d like to thank Russell Feldman for his insights into remote trading and, of course, you for watching. To catch up on Trader TV and ETF TV, go to TraderTV.NET and EFTTV.NET.