Buy-Side Trading Q&A: BlackRock
BlackRock won Best Global Trading Team at the 2019 Markets Choice Awards.
Markets Media spoke with Supurna VedBrat, Head of Global Trading at BlackRock, to learn more.
How and why is teamwork important for BlackRock’s trading?
Markets today are highly interconnected. BlackRock has a global presence, which makes teamwork even more important. Our size and scale allows us to have specialist trading desks located in multiple regions that operate as one global trading team. Furthermore, collaborative knowledge sharing across the team, along with a leadership team that brings different ideas and perspectives, has allowed BlackRock to proactively alter its trading strategies to adapt to changing external market conditions.
BlackRock’s trading team uses the same risk management system globally, which has been instrumental in our ability to achieve best execution for our clients. Having the same view and trading tools across regions allows our traders to benefit from each other’s contributions such as using similar algos across the regions for the same product or transferring use of instruments and trading strategies such as ETF’s and portfolio trading from equities to Fixed Income. Teamwork has been essential to our ability to tap into the collective intelligence of our entire trading team.
How is BlackRock improving its trading in specific asset classes?
There are many examples but let me just touch upon a few. In credit markets BlackRock has been working with other market constituents on developing efficient models to increase the use of portfolio trading in fixed income, which offers an alternative method to access liquidity. The ability to trade large baskets of credit as a single portfolio trade allows either side to lay off multiple line items of risk seamlessly at a more competitive price than the individual trades while leaving a very light footprint in the market. Portfolio trading is one of those rare situations that is a win-win for everyone.
In equities, we have been very active in improving market microstructure in the wake of the ‘flash crash’ from a few years ago. We are also constantly enhancing the quality of algorithms, the controls around the algorithms and the decision making process behind which algorithms to use and when. We are also continuing to build out the trading ecosystem for ETFs, especially with the growing use of Fixed Income ETFs.
How else is BlackRock raising the bar?
Proliferation of data due to electronification and regulatory reporting has created an environment where data science and AI can increasingly be used in trading strategies. We are only at the beginning stages of using data science to help with analyzing market liquidity and further enhance trading cost analysis. We recognize dealer balance sheet has become a scarce commodity these days so we optimize how we use the balance sheet we are given.
Next two waves of margin regulation will cover 1,200 firms and 9,500 counterparty relationships.
Direct connectivity should capture large block trades and lessen information leakage.
Liquidnet will combine its AI-based analytics with RSRCHXchange’s tech, research, and distribution.
There was a shift in focus towards data, machine learning and artificial intelligence.
The partnership will allow integration and interoperability with legacy and third-party applications.