Buy Side Stretched Thin
Not unlike the U.S., Canada’s buy-side traders prepare for a changing landscape.
New technology, new market players, and new responsibilities are on the horizon for Canadian traders. Industry estimates report that high frequency traders are approaching 50 percent of market share in Canada, much to the chagrin of traditional traders—buy side and sell side alike.
“Things have changed for the buy side and the sell side alike—there are major themes in overall market structure and everyone’s had to learn how to deal with fragmentation,” said Geoff Keith, executive director of cash equities on the institutional trading desk of colossal Canadian bank, CIBC.
Prior to his role as an agency block trader, Keith spent his days as a buy side trader. “I hear from clients the same frustrations I hear from my colleagues—about the rise of HFT, changing regulatory environments…change is here to stay.”
Liquidnet, a global alternative trading system, primarily providing dark pools, is front and center in the new world of trading.
“I was talking to a client a couple months ago, where there used to be upstairs and the exchange,” said Robert Young, head of Canadian operations for Liquidnet. “He described it as a triangle, and there are more options, such as us—a dark pool—and the exchanges, which has changed. There are more choices for liquidity now for the Canadian buy side.”
For Keith, getting accustomed to the changes upon the buy side requires familiarizing one’s self with new technology. “We need to get comfortable with new technology to meet regulatory requirements, and get best execution and meet our objectives.”
Buy side traders in today’s increasingly competitive environment may find a greater involvement in the decision-making process, typically in the wheelhouse of portfolio managers.
For Bob McWhirter, who founded and acts as president of Selective Asset Management, a highly-ranked asset manager in Canada, having a skilled trader on his team is analogous to “having a sharp knife in the hand of a good surgeon.” The same de-sensitivity to emotion and openness to technology, or what McWhirter deems as the “world’s best algos,” can be useful.
“It’s not the same as having a sharp knife in the hands of an irate spouse,” he said, citing a priority for traders to have “light fingers.”
“When I look at a Bloomberg screen, I realize the screen’s dancing and we’re in the world of electronic trading,” said Bob McWhirter.
McWhirter commented on the increasing role between portfolio manager and traders.
“We (my trader and I) have a fairly tight working relationship as we wonder out, from what we are looking at the start of our trade,” he said.
Essentia analyses data to create behavorial “nudges” for fund managers' investment decisions.
With Adam Conn, Head of Trading, Baillie Gifford
The partnership will develop suite of U.S.-listed, physically backed, digital asset ETFs.
The addition of Essentia behavioral analytics solutions is an extension of Northern Trust Whole Office.
Upstart exchange has seen market share increase to near 4%.