How would you describe the dynamic and makeup of your desk?
We very much work as one team. Traders often need to cover their colleagues’ books, so we also emphasise and nurture trust and confidence in each other.
As a team, we cultivate and nurture a lively and open environment which encourages everyone to share their views and challenge ideas. Diversity of thoughts goes beyond gender, age and nationality, which are seen across our trading desks. Different perspectives tend to lead to different views and ideas. Together with the different time frames and trading styles our traders have, we can diversify our revenues as opposed to having all the traders agreeing on everything and having the exact same type of risk profile.
Are the skillsets that make for a good trader evolving?
Yes, as the markets become more automated some programming skills are becoming increasingly important. This may range from improving trading analytics and pricing systems to writing fully automated trading systems.
Having said that, traditional skills are still imperative. For example, traders must be able to form a view and analyse what a market is pricing in, and be able to make rational decisions under pressure and within short timeframes.
In short, the sweet spot is a balanced mix of the old and new skills.
What has been the main topic of conversation amongst you and your traders over the last six months?
We are constantly assessing what is currently driving markets and what might drive them in the immediate future. The policy stance of the Federal Reserve and how that might change is always upmost in our minds. Then of course the policy decisions of all the other central banks but US policy really is the main driver especially around turning points in the economy like we are currently seeing.
In currencies, the performance of the carry trade has also been discussed as it’s been a major driver in terms of outperformance and more recently underperformance of high yielding currencies versus the Yen.
Looking at the rest of 2024, what market structure changes are you most conscious of?
I’m most conscious of the fact that at the start of the year the Federal Reserve were expected to cut rates ahead of a potential US slowdown and this was very supportive for risk. For good reasons, these cuts have not materialised in 2024. As we start to see the economy slow thoughts turn to the Fed being behind the curve and having to ease more aggressively.
The change in backdrop is less supportive of risk and is going to increase volatility in rates and FX. This in turn will lead to less liquid markets, which will also create its own challenges.