High Touch Is Here to Stay


The death of the sales trader is definitely exaggerated and not true. He is here to stay.

Live long and prosper, Mr. Sales Trader.

The buy-side trader has come out and openly said it wants the human sales trader on a phone ready to discuss the equities market or orders. While algorithms are OK, they will not replace the human in terms of need and importance. Boom. Mic drop.

Richard Johnson, Greenwich Associates

In a recent study titled “The Voice of Trading” by Greenwich Associates, the market consultancy noted that voice communications remain a “still essential” component of institutional trading. Despite the trend towards electronic trading, voice communications between traders and their clients still sit at the heart of global financial markets, they write.

The report illustrates that despite the undisputed fact that algorithms, dark pools and electronic market makers have transformed trading, institutional investors actually execute the majority of their order flow via “high-touch” channels—usually via telephone.

“Hello, is there anybody out there?”

“Even in U.S. equity markets, often viewed as one of the most electronic markets in the world, high-touch trading, or single-stock trades routed to a sales trader, still represents the largest execution channel,” said Richard Johnson, Vice President of Market Structure and Technology at Greenwich Associates and author of the report.

And while high-touch trading and low-touch or electronic trading have historically been siloed and completely independent of one another, voice communications now play a role even when trades are routed through electronic channels. Greenwich data uncovered that 9 out of 10 of the trading professionals participating in a 2016 Greenwich Associates study use voice communications in electronic trades, primarily for post-trade interaction – either discussing trade performance and receiving allocation instructions – and pre-trade interaction such as confirming order receipt, discussing market conditions or expectations for the trade.

“Much of this pre- and post-trade interaction could be conducted via chat or email. “But the fact that so many traders still rely on voice communication when trading electronically speaks to the more personal nature of a phone conversation and the nature of the buy-side/sell-side relationship,” Johnson said. “Voice communication helps traders convey nuance, build trust and develop stronger relationships with their clients and brokers. And trading is—and always has been—a relationship business.”

Cheryl Cargie, Ariel Investments

Just ask the buy-side trader. At a recent industry conference Dallas Lundy, Director of Trading at Atlanta Capital Management said he believes the sell-side broker is an extension of him – and he needs that interaction.

“That interaction is very valuable and give brokers a chance to know us. I don’t want to be another trader on a call sheet,” Atlanta Capital Management’s Lundy said. “If that’s the case, I might as well use another algo. If you don’t call us, you’re not going to get our next order, and that’s if we gave you a first one.”

Cheryl Cargie, head trader at Ariel Investments has also gone on record as preferring and wanting brokers to contact her and make the trading relationship personal. And in order to have such a relationship, the brokers should call and add their own personal touch when dialing a trader. Otherwise, move over and let the next broker down the bench get a try as the institutional trader is often limited in resources, time and patience.

“Just pick up the phone. It’s really easy to do. Call us,” said Cargie.



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