Artificial intelligence and talent management to drive the evolution of buy-side strategies

BlackRock's Supurna VedBrat also highlighted the important of talent management as the fixed income ecosystem evolves.

Supurna VedBrat, global head of trading at BlackRock, identified the emergence of data science and artificial intelligence (AI) as key elements to the next phase of buy-side trading operations for fixed income.

Speaking to Billy Hult, president of Tradeweb, as part of a fireside chat at this year’s Fixed Income Leaders Summit US conference, VedBrat opined that due to the changing nature of the fixed income ecosystem, these differentiators would only grow in importance in the near future.

“Data science and AI gives us the ability to truly augment human intelligence with computing computer, and you are able to do that at scale,” said VedBrat. “I think it is going to materially change trading strategies that the buy-side uses and even on the sell-side.”

“You don’t need human intelligence to pick trades, so you can automate a lot of that flow and the trader is now much more of a risk manager overseeing that the market the working the way we expect, and if not, they have the ability to step in and correct it.”

VedBrat also touched on the proliferation of data, which she believes will soon result in clean data sets available to firms from the cloud that will significantly increase computing power to ultimately improve trading and investment decision-making, in a similar manner to trends already occurring int the equities space.

Considering how the evolution of the trader skill set may also play out, VedBret underlined the importance of proper talent management, particularly as changes to the fixed income ecosystem occur, such as the growth of exchange-traded funds and portfolio trading.

“I like having teams with diversity of thought and that comes in many different ways; people with different regional experiences, people who are representing different age groups, because that is the way we are going to be able to keep solving in an agile manner,” she said.

Considering how such teams can be deployed, VedBrat said that the traditional pyramid model did not necessarily result in the best ideas for firms, and that creating an environment focused on agility and innovation is better suited to an efficient and rewarding ideas process.

“It’s important that your passion, your purpose, is aligned with what the firm’s purpose is, because that is what is going to make a much better working environment. At BlackRock we want to give people multiple different experiences; it is there to take, we create the opportunity and they need to grab it.”