The traditional trader
With Shane Wallis, Managing Director of Block Trading & Execution Services, CLSA
Block trading has evolved a long way since its original inception, and the advent of the electronic trading age has continued to advance that change as increasing percentages or orders are broken down and executed electronically. However the desire of the buy-side to execute large positions through blocks, the fundamental skills required by the block trader, and the role of the trader in being aware of movements in the market and finding the other side to large trades remains the same.
The increased speed of information has had an impact on the risk factors in block trading, as buy-side traders need to be increasingly aware of information leakage and the potential for markets to move against orders. The trust relationship between the block trader and the buy-side is more important than ever as a result. It is this trust that is hard to replace with electronic block execution alternatives, and can be hard to replace in a time of changing sell-side headcounts.