With Frank Loughlin and Emma Quinn, Global Co-Heads of Equity Trading at AB
Emma: Our joint global position came about because AB wanted to ensure that it was focusing on all aspects of the global business. We are a global firm and we wanted to make sure that the structure matched that outlook. We also saw the advantage of having people with expertise in different regions using that experience globally. Although day-to-day we each have responsibilities for certain regions, we had a clear mandate to run the trading team with a global philosophy as there are clear advantages for the clients and the firm for us to have a global outlook.
Frank: It really does need to be a global role – at a high level, a number of strategic decisions have to be made globally, including things like staffing, infrastructure, technology, commission policies and broker relationships; these decisions all have to be made jointly and with a global focus in mind. We can’t operate globally and make decisions regionally, so in terms of the role (notwithstanding that we are in different geographies) we do make decisions jointly and globally.
Emma: In an environment where regulation and market structure issues are increasingly global in impact, this does give us something of a philosophical head start in having a wider awareness. It also means that, because Frank and I have traded all of the regions and markets that we’re involved in, it gives us a depth of expertise and a different perspective – we can understand the detail of what the regulatory impact may be.
Key strategic concerns
Frank: In certain instances there are regulations and nuances that differ market by market and region by region. The strategic aspects where issues have to be thought through globally have to flow down from a global level to the team members. They have to think of themselves as part of a single global trading team and not a series of regional desks that happen to report up to the same management structure.
Our teams have to communicate and collaborate as a global entity. They have to behave in that way on a day-to-day basis otherwise it doesn’t work. It defeats the entire purpose if at one level you are trying to make decisions globally but on another there are people acting as if they are part of a local geography.
Emma: I think that has probably been one of the biggest changes that we have seen in the last year – encouraging the traders to develop a more global mentality.
From a quantitative perspective we have been able to learn from the different regulations that apply in different regions and this drove the restructure of our quantitative trading. There are often things that we do in one region that could work well in other regions and this area is one of our main focuses.
Frank: As an example, there are also regional nuances around how IPOs and after market blocks are handled. In terms of best practice, there are probably a consistent set of principles that we should all follow in order to maximise and optimise our outcomes when we participate in IPOs or other types of offerings or liquidity events that are not part of the normal course of secondary trading.
Emma: This global outlook ripples through to vendor relationships and technological conversations, as there is that standardisation in how we communicate. It allows us to prioritise on a global level and we can make sure that there is a priority list that Frank and I are comfortable with. We are effective in that respect; everyone knows where we’re going and everyone’s moving in the same direction.
Frank: Having people like us acting as referees, so that vendors understand what the global needs are, is a much more effective way of deploying resources than having people from different regions who may not understand other regions’ needs, come to the table and just talk their own book. At AllianceBernstein we need people who understand the business globally to balance those disparate needs and global interests, and that requires real global visibility. The regions are not able to make those decisions on their own because they don’t have the perspective to compare their needs to the needs of another desk or regional group.
Emma: And to that effect, Frank and I can. We weigh up the issues using our ‘global heads’ and have the foresight to identify targets further ahead of time; for example in London we may need a particular sort of data for the regulations that apply there, and in Asia we may need something else. We’re not just adding on those tools as and when, we add what they need in a particular region and then we roll it out to the next one.
Furthermore, if we see what may be best practice from a risk or compliance perspective in one region, we can still roll that out from a regulatory standpoint (even though it may not be a problem in other regions). It allows us to choose where to roll out best practice even though it may not be a requirement in another region we see it as good management (particularly good risk management) to do so.
This feeds through into the certainty of the relationships we develop with our counterparties; they know we will adopt global best practices even when they are not necessarily a requirement.
Emma: Our clients and counterparts benefit from the consistency of our structure; Frank and I make decisions on a global scale and there is consistency among the regions. We would never say that we want one thing done a certain way in Hong Kong and a different way in London and then a third way in New York. There is a consistency throughout in that respect and clients know that these decisions have been made at the highest level. Therefore, trust and transparency can be built around that global conversation.
Frank: This applies to clients for whom we manage global mandates, and for whom we trade everywhere, to the extent that we have a logical and consistent process globally. This helps them to understand how we operate in that it is consistent across the portfolio that we manage for them globally.
Our philosophy also makes it easier when we talk to brokers. We want to have a consistent experience with our top trading counterparties, wherever they are in the world and notwithstanding potential differences in their capability. We view our relationships with the brokers globally and holistically and so if we are united in thinking globally it makes it a lot easier to convey that message to the brokers.
Part of this is how the sell-side is structured. While it may be unusual, on the buy-side to have a shared global co-head role, it is not as uncommon on the broker side. Other top firms have global co-heads of equities or of electronic trading so they are probably far more comfortable with the idea than some of our buy-side colleagues.
The right attitude
Frank: There are benefits to having two people in different parts of the world covering the business as a whole, because the role is active 24 hours a day. Emma is in Hong Kong and I’m in New York. The time difference means that we have non-stop coverage from Monday morning Hong Kong time until the close in New York on Friday, which wouldn’t be the case if we were one person. We can get a lot more done when there are two of us working together.
Emma: But it does come down to those two people having to work well together. The structure wouldn’t work if we were unable to put our own personal agendas aside for the good of the team and then the clients.
Frank: With regard to the actual working dynamic, the two most important attributes are respect and communication. We have to view success as intertwined and seamless. The team’s success is our success, it’s not my or Emma’s success. It requires a certain mindset but if it works, it is very effective. Even with all the technology in the world you still need the right people and the right thinking to make it work.
Emma: Honesty between the two parties is also very important. Frank and I have very open and honest conversations. We debate things through because we don’t always agree with each other and that’s a good thing. But once we make a decision together, then we are committed to it whether we were for or against it during the debate.
Frank: It is very important that we present a unified front to the team, to other people internally and externally once a decision is made. There can be no uncertainty in people’s minds as to where we both stand on an issue.
Emma: Frank and I are very similar in how we think about ethics and morals, so when we discuss an issue I know about 90% of the time where Frank is going to stand. Frank is the same with me because we have very similar views about clients outcomes or how the team should function or counterparty relationship.
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