The Human Aspects of the Trading Desk

Kirstie MacGillivray, Kames Capital

In recent years diversity, inclusion and employee well-being have become buzz words within financial institutions with some wholeheartedly recognising the need to embrace change and improve in these areas whilst others, perhaps are more reluctant to get involved. However most now recognise that creating a healthy working environment is conducive to producing focussed, happy employees. But what does that really mean in practise and is it possible on a trading desk potentially covering multiple asset classes in different time zones?

It is well known that traders work long hours, but we should not forget that they are also supported by operations, IT and compliance teams who work similarly long hours. The recent campaign, led by the Investment Association and AFME, for a reduction in market hours has brought the working day of a trader into the mainstream press. The potential liquidity benefit would be welcomed by all who directly operate in the market but the potential human benefits should be welcomed by the whole industry and, in particular, by anyone responsible for traders on a trading desk. The potential diversity benefit has been well documented but the potential health benefits are also compelling.

Mental health, and the cost of mental health issues (see chart), is increasingly in focus- traders tend to spend their (long) days sitting at their desks looking at their screens- which is not conducive to good physical or mental health. The proposed shorter market hours may allow for traders to visit the gym before work, allow them to drop off their children at school before work or be home to help their children with their homework. All of which should create a healthier mental state. We should also encourage our traders to spend time off the desk throughout the day- this can be as simple as meeting up with colleagues elsewhere in the firm for a 10 minute chat, taking a short walk, attending special project meetings- that short break from the desk on a regular basis can be the difference between feeling well and feeling pressured.

Those in charge of trading desks also have a responsibility to watch out for ‘red flags’ which may suggest someone is struggling with their work environment (or external pressures) and make suitable adjustments. We expect more from traders now- the SMCR regime in the UK brings sharply into focus the personal responsibility of the role, the regulatory and compliance burden continues to increase for traders- all within an environment of significant cost pressure. Heads of Trading must ensure their team feel supported and must lead by example in that regard.

By creating a healthier working environment we should be able to attract more diverse candidates onto the trading desk. But what can we offer them? In years gone traders simply traded their asset class and did not get involved in any other aspects of the asset management business. The career progression offered was to wait for the Head of Dealing to move on or retire- and we wonder why we have a diversity issue now?!

The issue of career progression is still a tricky one, however I believe there is lots we can offer- and trading desks now (and in the future) require diverse skillsets. There are significant opportunities for traders to engage across the asset management business- whether investigating new fintech offerings to enhance the trade flow or data mining to ensure the best possible execution outcomes. Perhaps one of the advantages of an ever increasing and changing regulatory outlook is the opportunity it creates for traders who want to expand their experience and knowledge. Trading desks require market structure experts to understand how best to interact with the market in the most efficient manner, global desks require traders who understand the different regimes they have to operate in and many traders now need to understand the nuances of the various fund structures which their firms manage. By constructing a trading desk in this way we can ensure diversity of thought and constructive challenge to existing practises- both of which will lead to better execution outcomes for our clients in the long run.

New entrants into the workforce now expect more flexible working arrangements. Historically we have regarded the trading desk as an area where flexible working is impossible. However some creative planning can give flexible working opportunities to the traders. There can, understandably, be reservations about the control environment when trading from home, but traders can be given the opportunity to work from home on investigative topics or CPD which do not require the ability to trade (subject to appropriate cover on the desk). It is crucial that there is a clear deliverable from these arrangements to measure the value of the output produced.

There is still a reluctance to ask for flexible arrangements so Heads of Trading must lead and encourage- and traders must show some bravery and ask! If there is a clear plan to ensure desk coverage and the benefits of the flexible arrangement can be shown it is very difficult to refuse such a request.

This is a great industry to work in – we need to encourage the next generation to join. We can offer them an exciting career at the forefront of technology innovation, full of intellectual challenge and the opportunity to drive change. Heads of trading must always remember your trading desk’s success is based on the quality and diversity of your skillset on the desk. 

DISCLAIMER

This document is for use by professional journalists. Its content is written for use in trade publications with a professional audience.

Past performance is not a guide to future returns. Outcomes, including the payment of income, are not guaranteed.

Opinions expressed represent our understanding of the current and historical positions of the market and are not an investment recommendation or advice. Any securities and related trading strategies referenced may or may not be held/used in any strategy/portfolio. Any Opinions and/or example trades/securities are only present for the purposes of promoting Kames Capital’s investment management capabilities. Sources used, both internal and external, are deemed reliable by Kames Capital at the time of writing.

All data is sourced to Kames Capital unless otherwise stated. The document is accurate at the time of writing but is subject to change without notice. Data attributed to a third party (“3rd Party Data”) is proprietary to that third party and/or other suppliers (the “Data Owner”) and is used by Kames Capital under licence. 3rd Party Data: (i) may not be copied or distributed; and (ii) is not warranted to be accurate, complete or timely. None of the Data Owner, Kames Capital or any other person connected to, or from whom Kames Capital sources, 3rd Party Data is liable for any losses or liabilities arising from use of 3rd Party Data.

Kames Capital plc is authorised and regulated by the Financial Conduct Authority.

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