As trading desks enter the fourth quarter of 2025, the US Government shutdown kicks off a fresh bout of uncertainty and potential for market volatility. Michael Warlan, global head of trading and operations at Third Avenue Management, speaks to Trader TV about unease in the market if the government disruption continues past this week. Amid the unsettled market backdrop, Warlan also discusses the details of how his buy-side firm is rolling out a new execution and order management system (EMS and OMS), detailing implementation challenges, its importance in today’s trading environment, and the future role of auto-execution across its multi-asset desk.
Interview
Josephine Gallagher
Give us a temperature check on markets. What have trading conditions looked like in Q3, and what is driving trading activity right now?
Michael Warlan
I think Q3 was typical for the summer season. You know, very consistent activity, no major shocks. We did have the September rate cut, which had the potential to drive an increase in volatility, but it was so well telegraphed that it came and went with not much fanfare. And as we’ve pivoted here to the start of the fourth quarter, we’ve been greeted with this government shutdown that, going into the weekend, was still active. I think there’s the expectation that this will resolve itself in short order, but if we do linger past this week, you’ll start to see more unease in the marketplace. First signals of that will come, probably from an increase in derivatives usage, and short sellers come into the market to hedge themselves out or to reduce some of their exposure.
Josephine Gallagher
Amidst all of this, you’re also implementing a new execution and order management system. Tell us, why is that and at what stage are you in rolling that out?
Michael Warlan
When we look at how we are able to keep up with these markets, and how we’re able to react, and how we’re able to manage things efficiently, a lot of that is dependent upon technology. How we actually integrate and interact with the markets is very important. So the key here is playing for the future of the markets. What we’ve seen is an increase in speed, an increase in the amount of data, the amount of information, the amount of things that we are doing or looking at. There is the need to increase your connectivity with counterparts in trading markets. But there’s additional touch points within the entirety of the investment cycle. It’s not just the pre-trade and the post-trade, from my perspective, it’s having analytics, having compliance, having client service, all getting access to the same information in a more real-time fashion. Today, workflows are fragmented, but once we consolidate, we’ll have a uniform real-time view of liquidity costs and performance. That means smarter, faster execution decisions, eliminating some of those manual steps. It also gets us closer to the client side. With better data, we’re able to receive more timely updates, particularly on cash flows, client movements, which in a fast-changing environment is particularly useful. We are in the beginning phase of the implementation, which means that we’re doing a lot of data management and trying to make sure that we have access to all the data that we need from a historical standpoint, and that that will be consistent with what you’re currently working off of. And then once that’s in place, we’ll go to a parallel testing where we’ll be running in two environments, making sure that we’re consistent with the expectations and the outcomes of what we have in the live version first. It is time-consuming. It causes us to bring in additional resources, because we can’t stop doing what we’re doing on a day-to-day basis. But in the end, you know, this is all worth it. It really is something that you need to, you know, constantly review to make sure that you not only have the necessary tools to operate, you know, in your current environment, but have the bandwidth to expand as things evolve, and have the ability to integrate solutions more quickly, things like automated trading. So whether it be you know, auto workflows, auto execution, auto settlement, auto pre- and post-trade analytics that help you with the decision making that takes some of the focus off of maybe the more routine situations, enables you to put more resource into the higher touch situations that you can add more value in, like block trading, for example, sourcing liquidity there. I think having the ability to adjust to what suits your firm’s investment style, your firm’s workflows, is key, and I think having less rigidity and more flexibility around that is where most of the technologies you know benefits will come from.
Josephine Gallagher
Thank you, Michael, for your insight, and of course, you for watching this has been Trader TV This Week.
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