Head of trading: a role redefined

Heads of trading desks are spending less time trading than ever before as rapidly-evolving regulations are shifting their daily priorities.

By Joe Parsons July 06, 2017 9:35 AM GMT

Global heads of trading at major asset management firms are spending less and less time actually trading. After conducting in-depth interviews with eight heads of desks, The TRADE discovered that those occupying these roles are seeing more of their time taken up by new regulations rather than trading.

It is no surprise that the all-encompassing MiFID II is challenging the role of the global head of trading. Despite requiring extensive experience in trading to rise up through the ranks, it is usually the case that the bigger the team, the less time required to trade.

Being a head trader now means keeping up with market structure changes and regulation, rather than with what is going on in the markets. This has meant a dramatic reduction in the amount of time devoted to trading.

Of eight global head traders interviewed by The TRADE, half said trading takes up on average between 0% and 5% of their time on a weekly basis. 

One global head trader says: “I deal myself on average between 2% and 5% of the number of equities and fixed-income every month, with more concentration on end-of-momnth for fixed-income and quarterly earnings season for equities.”

While this has been a theme for traders over the last five years, 2017 is shaping up to be a crucial year for the buy-side to get to grips with MiFID II in Europe.

Where’s my Bloomberg?

One head trader explains: “Regulation is very important and takes a lot of my time up, not only in making sure we adhere to the latest rules but also figuring out how we need to adapt to the new ways of trading that have evolved to cope with the regulatory changes.”

Speaking to The TRADE in its Q4 2016 issue, sources suggested that some senior traders have voluntarily opted to leave their roles – and in some cases the industry - because they do not want to face the barrage of regulatory scrutiny coming their way. Over the last two years, The TRADE has counted no fewer than 20 buy-side heads of desk or senior traders from big name European asset managers leaving their jobs.

Two global head traders told The TRADE that they have even given up their Bloomberg terminals, and another says, “I’m trying to organise myself to avoid such a situation.”

One former senior equities trader, who asked to remain anonymous, has said the impact of regulation has diminished the global head trader role in daily trading activities, in which “due to previous regulatory creep the role of hands-on head of trading has been diminishing to the point where that role is basically a quasi-compliance/client sales role.”