Buy-Side Trading Q&A: BlackRock
BlackRock won Best Buy-Side Trading Enterprise at the 2018 Markets Choice Awards. Markets Media followed up with Paul Whitehead, Global Head of Equity Trading at BlackRock, to better understand the ethos of the firm’s trading operations.
Who are the key leadership people in BlackRock’s trading and what are their roles?
Global Trading is led by Supurna VedBrat. Dan Veiner is Global Head of Fixed Income Trading, I am Global Head of Equity Trading, and Yudhveer Chaudhry is Global Head of Foreign Exchange.
Please describe the essence of BlackRock’s trading desk — what are the primary capabilities and how does it differentiate?
BlackRock’s trading desks bring together first-in-class technology, exceptional trader experience and capability, and top-tier access to all pools of liquidity. Our scale creates significant internalization opportunities which lead to cost-saving opportunities for our clients, unique to BlackRock. By leveraging our platform we deliver investment outcomes that cannot be replicated by smaller or more narrowly focused firms.
What are recently completed and/or ongoing initiatives?
We innovate across two key themes, Liquidity Access and Analytics. On the Access front, we are early adopters of electronic strategies in Fixed Income and adoption of ‘all to all’ platforms. Our latest additions to analytics include segmentation of liquidity to better understand how to adjust tactics throughout the day.
How have BlackRock traders adapted to the volatility we’ve seen in recent months? How is this a challenge and how is it an opportunity?
It is a challenge in that liquidity dynamics have changed but is an opportunity to demonstrate the strength of BlackRock’s capabilities and access to liquidity. Book depth in equities has deteriorated and the new volatility regime leads to higher variable costs (i.e. market impact) which requires more dynamic trading tactics.
What do you see as the future of institutional trading?
Scale, efficiency, and risk control will be key contributors to delivering performance through execution. Those who chose to invest in technology and analytics will have a significant advantage managing market complexities in equities and ‘electronification’ in fixed income. Systematic Request For Quote (RFQ) platforms will continue to penetrate new asset classes (Options and Equities to name a few). Intraday liquidity quality analytics will also play a bigger role in re-establishing the Trader as a contributor to portfolio alpha.
Global ETFs had record net inflows of $1.3 trillion in 2021.
The Universities Superannuation Scheme is the UK’s largest private pension scheme.
Buy-side and sell-side firms need to integrate applications to streamline traders' UX.
Passive funds represented nearly all U.S. equity inflows.
President and chief executive officer of State Street Global Advisors will retire in 2022.