Canada’s pension system is advanced and unique.

Rather than relying on external investment management firms, the pension plans manage money in-house, with experienced financial professionals deploying sophisticated data analytics, advanced trading tools and leading-edge technology to transact efficiently and protect end users’ investment returns.  

With $266 billion of assets under management as of year-end 2024, Ontario Teachers’ Pension Plan invests in a broad array of asset classes on behalf of 343,000 working members and pensioners, and it is the third-largest pension fund in Canada.

Ontario Teachers’ Pension Plan won Best Pension Trading Team at Markets Media Group’s 2025 Global Markets Choice Awards.

Markets Media caught up with Kevin Duggan, Senior Managing Director of Beta and Global Trading at Ontario Teachers’ Pension Plan, to learn more.

How has trading transformed over the past decade? 

I’ve been at Ontario Teachers’ for 27 years, so I’ve seen the evolution from the buy-side perspective. Over the last 10 years, we’ve seen a heightened focus on the trading part of the investment life cycle. You want your portfolio managers to focus on managing portfolios and not co-mingling by being a bit of a PM and being a bit of a trader. So there’s an acknowledgement that trading is a very important part of the investment life cycle, as opposed to just being something you need to get done quickly.

Having a focused area – a center of excellence – is a large part of our narrative and gives our team a greater opportunity to enhance investment performance. And I think we’ve seen pension and asset management peers follow along that way with their own centralized trading areas.

What are some key current trends?

One trend from the buy-side perspective is the development of different rules of engagement for portfolio managers and those interacting with dealers.

Portfolio managers want to talk about trade ideas, the direction of markets, and risk profiles. Traders want to focus more on liquidity – how to get in and out of the market and what technologies provide ways to interface with the marketplace. Portfolio managers just have a very different job than traders have.

How has OTPP’s centralized trading function evolved? 

We started back around 2016-2017, when our trading was decentralized except for equity. Equity has always been a centralized area because of the compliance aspects, but the rest of our trading was done by portfolio managers. We had roughly 20 people trading futures, a half-dozen folks trading FX, and 15 plus portfolio managers authorized to trade Fixed Income products. This structure lacked specialization and made it difficult to build deep focus on the trading aspects of our investments.

We knew we could come up with a better outcome for the fund, so in 2017 we brought the different trading parts under the Capital Markets group – we’ve since created a Global Trading team, which now resides under Total Fund Management.  The initiative was both a technological journey and stakeholder engagement journey – not surprisingly, many portfolio managers like trading, and although we want them to focus on portfolios, it’s also important for them to stay connected to the market.

So we created a whole set of rules of engagement as we developed our technological footprint. Some of the questions we were looking to answer and address were: What’s the right order management system? What are the right execution management systems, for equity, for fixed income, for credit, and for FX? And then we built the core, starting with equity and then adding assets as we went on. We centralized all the way down to repo trading. The build took the better part of three and a half years but it let us action our vision for where we wanted to go and how we wanted to create best-in-class engagement with the marketplace.

What are the primary benefits of a centralized trading function? Are there drawbacks? 

Having a group to focus on the singular mandate of managing only a small part of the investment lifecycle is very beneficial. If you consider a portfolio manager trying to add a significant amount of money to any one trade, the trading aspect might not mean that much to them. But when you aggregate what Teachers’ is trying to do, having an area of focus on minimizing cost and slippage for example bears itself out.

We got behind the eight ball on technology when it was bifurcated. How do you build up a cohesive order management system strategy, when a credit portfolio manager wants one thing, and FX and repo each want something different? That’s not sustainable. You need central personnel to put the right technological footprint together, which was a big deliverable from the early days of the centralization effort.

One challenge is creating a model so that portfolio managers still feel connected to the market even though they’re not executing the trade. It’s not always easy to have portfolio managers see the traders as an extension of their team, but the secret sauce is to put in the legwork to make the right hires, demonstrate asset class trading expertise and build the relationship with the portfolio managers. At Teachers’, each of our trading groups has a strong lead whose job is to understand the strategies and make sure the PMs feel that the traders are an extension of them, and that traders aren’t gatekeepers who tell them what to do.

Another challenge trading faces is how to simply and consistently show the value that is derived from a focused trading team. Transaction cost analysis across all products and trade sizes is difficult as a one size fits all solution is not feasible.

How is your team structured, and how does that strategically benefit the centralized trading function?

We have three areas of focus and a lead in each area (Credit, Rates, Liquids). Each of our leads is a player/coach whose job is to trade and also to develop the team. We try to use some of our younger talents to make sure we have the breadth and the consistency of coverage, while we use our more experienced folks to make sure they have the depth of knowledge and have what it takes to interact in these complex areas.

We have a very diverse skill set on the desk. Our traders’ educational backgrounds include business, technology, science and engineering and we have team members ranging from eight  months experience to over 25 years. We also have a 55-45 male-female ratio, which is uncommon. We feel that each one of our younger members can cover all products, and the next phase of their development will be for them to specialize in one of our three areas.

Describe your trading, research and analytics function?

You can break down the delivery of traders into two areas: the actual trade and the research that goes into the cost and how to improve. Having an analytics team allows the traders to focus on trading with the input of the analytics team – to help them make better, data-driven decisions, which quite honestly you can’t really do when you’re in the middle of a trade. So we created a dedicated area to focus on cost, cost minimization, and how we work with portfolio managers, and how we stage trades with different execution managers.

We build this team with individuals that have a trading background and supplemented the team with data technicians.  Their mandate is not to trade but to leverage their knowledge and apply it to the trading area in partnership with the traders that execute the trades. This has worked out quite well for us, as we’ve been able to push the boundaries in more opaque markets such as fixed income where some of our peers said this type of trade cost analysis couldn’t be done. We learned it was hard, but achievable when you have the right group of dedicated people focused on it.

Any final thoughts?

One other thing we focus on is the external stakeholder management aspect of our job. This is something we elevated about a dozen years ago with semi-annual feedback reports from our top counterparts. We look at how much we paid them, how much resources we consumed from them, and we put that all into a detailed report to review with our key external stakeholders, twice per year.

The Street loves this. They love the feedback they get and how we are open and transparent on what we value, where we think they’re doing well, and where we think they’re not. Never once has one of our large partners said they don’t want critical feedback. They want the feedback because it allows them to target where they want to get better.