For Gordon Noonan, head of FX trading – London at Schroders, a multi-asset approach to foreign exchange execution is not just effective, but essential.
Across capital markets, specialisation remains key to many strategies across the street, however, Noonan argues that there are real gains to be won from a holistic approach to a desk.
When questioned as to whether dealer relationship management presents a challenge for the multi-asset approach given that the perception is that specialised desks are often more successful at maintaining counterparty connections, Noonan conceded that it was of course a valid point.
Noonan explained that an integrated approach is the ideal path forward, wherein work is being calibrated by experts in the background.
“You’re never going to get to a point where the team is super multi-asset and everyone’s a five out of 10. We would never come up with that.
“[…] In my world, how I visualise the desk is that I’m the FX guy but I will be able to pick up rates, I’ll be able to pick up credit etc. but it will have been calibrated by someone else who are experts in the area.”
He added that the strategy should be focused on allowing expert knowledge to scale across multiple asset classes, without diluting core competencies.
When further probed as to whether he would outsource the FX business management at his form, Noonan was firm, asserting that there is more value in keeping this inhouse.
“Connecting you with the street is very, very important to us. So, we wouldn’t outsource. At the end of the day the trading desk is generally the central touch point for the street so we take in a lot of that information, and we disseminate that into our PMs as well.”
Read more: Specialism ‘just as important’ as standardisation when considering multi-asset goals
Elsewhere, the conversation led to whether FX traders have something to learn from traders from other asset classes.
Noonan highlighted that those in the equities and fixed income spaces tend to take longer to make decisions and take more time to mull next steps – something that is perhaps not always applicable in the foreign exchange sphere but still remains a point of reflection.
“I’ve learned an awful lot from my equity colleagues especially as regards the connectivity they have with the different EMSs and their OEMSs […] they look at things just slightly differently and they have different ways of executing.
“FX moves so quickly, and you can move risk so quickly but in the equity space, how they interact with venues I think is very, very interesting. I’m not sure it feeds into FX, but you learn so much from comparing”.