Sell Side: Relationships Rule08.02.2017
The role of the sales trader remains one of the most important in trading relationships.
And as Jason Radzik, Managing Director, Head of Americas Derivatives Execution & Clearing at BNP Paribas put it, the market color, expertise and support sales coverage supplies to the buy-side client is key to a firm’s success. Sales’ ability to cultivate existing relationships and forge new ones is as important as connecting pipes or fiber optics. The trend towards electronic trading is only becoming greater but relationship building is the driver to growing that part of the business.
“We’ve hired additional sales coverage who supplement our trading desk,” Radzik began. “There’s a growing trend on The Street where cultivating relationships is as important as connecting the pipes. The sales role is alive and very much needed these days.”
And why is that? Many have rung the death knell bell for human sales traders amid the proliferation of electronic trading tools, machine learning and artificial intelligence and cost cutting across the industry but Radzik explained to Traders Magazine that the buy-side, in its search for alpha, wants to hear from sales traders. After all, with so many executing brokers in the trading universe it’s all too easy for the buy-side to change brokers.
The buy-side wants a relationship but not for it to be a waste of time. And the type of relationship can depend on who the client is.
Radzik said, “Many clients more heavily weigh stability and strong relationships with their providers over the latest new trading tool or development. Clients attribute real value to counterparts that have stayed with them through the ebbs and flow of the market.”
Also, what happens after the client gets onboarded onto a broker’s desk and system? It’s the sales coverage who provides the relationship maintenance, he added. This is something an algorithm simply cannot do. It’s the man or woman who calls and touches base to chat about anything or invites a client to sponsored event. This phase of the sales-buy-side client relationship is much different than the initial courting phase and arguably is the most important. Making sure you continue to be in tune with a client’s needs after their first trade is paramount for success.
“Overall, there’s a need and desire by clients to be shown that they are more important than just the execution, especially when it comes to new customers and the first trade,” Radzik said. “The interaction with the sales role is the best way clients can see just how important they are to you.”
And Radzik knows how the buy-side trader thinks as he himself was one at SAC Capital before transitioning to the sell-side. Besides working at SAC Capital, the 16 year veteran has worked at Bank of America and Bear Stearns in both derivatives and clearing capacities. He has seen from both sides of the trading desk the market’s move from telephony (high-touch) to electronic trading (low-touch); from just stock trading to derivatives and other asset classes.
Also, Radzik has witnessed the move now towards a one-touch trading approach where sales coverage has become the main entry point to a firm’s menu of services – starting at cash trading and moving through prime brokerage and to asset classes such as equities, options amd futures.
“There is a real synergy to the one-desk one-touch approach to trading, which started in earnest about 1.5-2years ago,” Radzik said. “Now we have the same trader touching clients and supporting them across multiple products. He/she has multiple skill sets – that’s the 21st century trader.”
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