Gráinne O’Connor has an eye for opportunity – and impeccable timing. Starting as a newly qualified accountant with Lehman Brothers in 2000, she early on saw the growing interest in the nascent arena of electronic trading, which the bank was just starting to build out on its equities floor, and jumped in as soon as she could.
“Markets always interested me,” she told The TRADE. “I worked closely with the heads of equities on business planning, looking at new products and regions that could forecast client profitability, competitive market share, and a broad range of other initiatives. The firm was growing exponentially at the time, and I got great exposure working with some very smart people. But I decided I wanted a little bit more.”
Laying the groundwork
In 2005 she joined the program and electronic trading desk – which came as something of a baptism of fire. “There was a lot of very rigorous training, because you have to understand the fundamental dynamics covering global markets, so it was a really good grounding,” she explained. “Lehman was heavily investing in their technology product at the time, and leading the way in terms of pushing out electronic algos to become a top five player in that space, so it was a great time to join – just on the crest of that technology wave.”
Covering a mix of hedge funds and institutional clients, O’Connor quickly learned that relationships were crucial, even as trading was becoming more automated. “I always made sure I had good cross-product relationships across the floor, and I became one of those relationship sales traders – you always want to ensure that a client has a good experience. That really helped me form a bond with my clients.”
Timing is everything
But, as we know, all was not well with Lehman Brothers – and in 2007, the cracks started to show, cracks that would eventually precipitate not only the decline of the bank itself, but the collapse of the whole house of cards in the form of the 2008 financial crisis. O’Connor, however, once again demonstrated her eye for the chance. “There were a lot of rumblings around the end of 2007 on the looming credit crisis in the sub-prime mortgage market, and we’d already seen the fall of Bear Sterns. As it happened, one of my main hedge fund clients had an opening in early 2008, which I interviewed for. I literally left the Lehman building for my new role, and the firm collapsed two weeks later!”
As a trader with GLG Partners, where she spent the next five years, O’Connor learned what it was like on the other side of the street. Trading European and Asian equities for the long-short and long-only funds, she found that life on the buy-side was a very different experience. “The GLG family was quite unique, and traders were situated very centrally to the heads of the firm,” she explained. “Communication was absolutely key, and there was a lot of really genuine collaboration between traders, fund managers, risk managers – which I think is crucial for a successful business.”
In 2014 she moved to BlueCrest Capital Management – another hedge fund, but a rather different (and perhaps slightly more fast-paced) kettle of fish, to help launch its equity product, before joining Fidelity International as a senior equities trader in 2018.
“I saw the opening and thought – OK, I’ve done sell-side, I’ve done hedge funds, it would be quite nice to trade for longer term fundamental investors” she said.
Life on the buy-side versus the sell-side brings its own unique challenges. At Fidelity: “We often receive huge orders relative to market volumes, with the average duration of a high touch order over three days. That’s where you need to have a really strong focus and the ability to sort blocks of stock to minimise transaction costs. The challenge can be immense sometimes, especially as we are faced with orders from the lower end of the market cap spectrum. It’s about patience and discipline. We’re very successful at block crossing rates – given the tools we have at our disposal like conditionals, risk capital, and of course the relationships we’ve built with brokers over the years.
But there are also universal similarities between buy-side and sell-side. It was nice to be able to apply my sell-side experience to buy-side trading, when it came to trading large programs, understanding different strategies (risk and agency), market structure, usage of algorithms, as well as TCA to benchmark trades and counterparties. It felt natural to set the bar high with counterparties, but also work with new brokers on their electronic offering, partnering with them to enhance their algorithm settings to suit our flows.
Again: “The same principles apply,” she explained. “We’re governed by best execution, and once that’s embedded, it doesn’t really matter what side of the table you’re sitting on. I enjoyed the family culture of smaller firms and whilst at times trading can be challenging, there is a real buzz as you are sitting amongst the investment managers where you are the eyes and ears for market and trade opportunities which help contribute to investment manger’s alpha, which they love. While there can be tears and sweat, it can often be a very bittersweet experience!”
At Fidelity, O’Connor feels she has found her niche. “I have to say it is now the place where I really want to be,” she said. “It’s not quite as fast-paced, and that’s a huge difference compared to the hedge funds I had worked in previously,” explained O’Connor. “But once I became familiar with the style of the fundamental investment managers it all became very normal.
She also believes she has been lucky to work with different types of investors. “Let’s face it, the market would be pretty boring not to mention more illiquid, if we didn’t have a variety of investor types (i.e., fast, real and retail money), as these make a market where investors can express a view, whether its short term, trending or fundamental, and let’s not forget, that each investor type is a liquidity provider/taker, and they all are integral for the market to operate efficiently.”
Communication is key
At Fidelity, she trades European and emerging markets focusing on financials, real estate and multi-asset. The team has five sector traders, one systematic trader and an order management analyst, lead by head of trading Tom Stevenson. Based in London, they cover markets across EMEA with a mix of both buy- and sell-side experience. Across the firm they work with over 80 fund managers from as far afield as Brazil, Toronto, continental Europe and Hong Kong, while Fidelity also has equity trading desks in Hong Kong to trade Asia Pacific and Toronto to trade North America, again making communication crucial.
“There’s a lot of collaboration between the trading desks and with my trading counterparts, we talk a lot about what works in one region versus another. We all use the same systems, but we might all use them differently, so we hold continuous roundtables to discuss issues such as liquidity, automation and so on, and our approach to them. Those conversations and how we can leverage experience are absolutely vital to our success.”
Even small things can make a big difference, when it comes to building those internal relationships. When O’Connor started at Fidelity in 2018, the traders and fund managers sat in different offices from each other, and sometimes even different buildings. “It felt quite segregated,” she said. “We’ve made significant communication enhancements since then – and in 2019 we moved to our new offices, with an open floor plan and, crucially, strategically located next to the tea station. That might sound silly, but it means everyone walks past you all the time and it gave us an opportunity to interact with the fund managers on a less formal basis, which makes all the difference when it comes to building relationships as well as chatting about liquidity opportunities, market soundings, and investment rational for particular orders.”
Pace of progress
On the trading floor, things can change fast. “When I first joined Fidelity, email was the main communication, which I found very strange and quite different – no one really used Bloomberg IB Chat, for example,” said O’Connor.
But Covid and lockdown brought a lot of changes, both in terms of work-style and technology. “We now use communication channels like Teams as our primary method, and that’s made a big difference. We have a lot of PMs that are not based in the office, or even if they are they might be on client or company meetings or listening to client calls. So if we have a new order, or we want to show some liquidity opportunities, we can now get a pretty much instantaneous reply back from the PM as to whether they’re interested.
“Essentially, I think the communication barriers have been totally demolished, and that has really helped PMs and traders work much better together. We can work more closely, we can keep them abreast of why names are moving in portfolios, we can advise them on positioning, on flows, look at trade cost analysis or how we can enhance execution. It really has built up the trust and those relationships have flourished as a result, PMs now feel really comfortable about coming to us to explain their thinking, their concerns.
“Another aspect is how we can trade more efficiently to reduce my execution costs, and we have a lot of analytics available to us now, along with a great quant team and some really strong visual tools. So we can look at the results, and then work together with the PMs to see how we can place orders better, whether it’s about timing, sending down a block, reloading, using different execution methods, sourcing new liquidity opportunities, and so on.
“The communication and collaboration with both the PMs and the analysts is crucial, but it’s also worth noting that they don’t always understand trading to the same degree as traders, so it’s also important from the perspective of being able to educate them so that they understand what we’re trying to achieve, which means that we’re all pulling in the same direction.”
The importance of these relationships was thrown into sharp relief with the advent of the Russia-Ukraine conflict earlier this year, which highlighted the strength of communication channels both within and outside the organisation.
“We started hearing rumours around the invasion of Ukraine, so of course it was really important to keep our fund managers updated with feedback from local markets – it was a minute-by-minute situation where everyone was constantly assessing the probability of serious war, and unfortunately that became a reality pretty quickly. We were trying to risk manage our positions and we saw a lot of brokers start to pull down the shutters and stop trading local Russian and GDR equities, so we had to be bold and brave and seize the opportunities when we saw them, as well as ensuring our operational risk was covered. It was a pretty hairy few days and having a really tight team was key. As was, it must be said, being in the office – we were just coming out of lockdown at that point and of course the progression towards hybrid working has been largely positive, but in situations like that, you just can’t achieve what you need to unless you’re all in the same space together.
“As much as anything else, it was needed in order to support the younger traders – a lot of them hadn’t really seen anything like that before, so it was important for the more experienced players to keep cool, keep a calm composure, and keep the conversation flowing around trading strategies, how best we should trade, who we should trade with. We had constant team huddles to ensure that trading was as effective and efficient as normal.”
Hand in hand with communication goes the tools not only to facilitate those conversations but to inform and execute their conclusions. “We have an ongoing dialogue around this, because technology is key to trading now – we streamline a lot of our flow and automate as much as we can through algo wheels so that we can focus on the less liquid names on the pad and concentrate on adding value and finding liquidity opportunities,” commented O’Connor. “We also find data really important, and we incorporate that into our technology initiatives like counterparty benchmarking, looking at IoI data, further streamlining our processes and so on. We work with good data to build detailed scorecards which benchmark our counterparties, so that we can work with them to improve service levels, which generally has more positive outcomes for everyone.
“It’s all about improving performance. I come to my desk every day and sit down and ask myself: what can I do better? How can I generate that alpha? How can I trade more efficiently? How can I make decisions more effectively, how can I add scale, how can I factor size complexities into the equation? These are factors I think about constantly. Technology can help with this, but another key factor is the way I work with my external peers.”
Because just as important as internal relationships are the external bridges, particularly with regards to broker relationships.
“Those relationships we had built up over time were instrumental in helping us deal with volatile situations. The role of technology is essential in accessing venues electronically whether it is via electronic wheels, automated dark conditionals, periodic auctions…there seems to be a lot of innovation happening in the space. The continuous fragmentation of venues in Europe adds to the complexities of trading which means liquidity is a huge issue, and while technology plays a key role, so too do our relationships with brokers. When it comes down to it the goal is just to figure out how to circumnavigate these issues.
“Our broker list is crucial to help me do so. My pad is full of small and mid-cap tricky and illiquid orders so it is important for me to work with specialist brokers in that region or sector, whom I have built up a lot of trust with when it comes to sourcing the potential contra and understands what I want to achieve.”
The importance of inclusion
There’s no denying that it’s been a rough year. But building these relationships, both internal and external, are what have supported O’Connor, and Fidelity, through the storms.
“The market is presenting so many challenges right now,” she said. “Whether its volatility, central banks curbing inflation, politics, regulation, the threat of recession – there are just so many things that impact what we do on a daily basis. But that’s also what makes this job exciting, because there is constant evolution.”
Team culture is a priority for O’Connor, who is proud of how diverse her team is – especially in an industry not always known for its inclusivity. The eight-strong FIL equities team has three female traders, and boasts backgrounds from Goa, Sierra Leone, England and Ireland. “We had quite a moving day recently where we embraced World Culture day, took some time off the desk to share emotional stories of our backgrounds, experiences and journeys to where we are today. We even had a bake-off to showcase regional foods,” she said. “While everyone had a unique story to tell, it became clear that our diversity is a large part of why we work so well as a team and it was so interesting to hear the struggle and sacrifice that our parents and grandparents made to ensure that some of us were the first of our generation to go to university, to become as successful as we are today. It was really humbling.
“There can be a lot of messaging that sometimes is missed, but people really resonate with personal stories and making these connections and getting to know each other also create a sense of inclusion and belonging. Collectively we will continue to push for diversity and inclusion within trading at industry events, through the Sustainable Trading network, mentoring schemes, promoting mental health awareness, and working with kids/students from under-represented backgrounds, among many other things.
“I want to be involved in pushing that change across the trading industry, and one of the most important ways I can do this is by championing the benefits of inclusion and diversity. Expanding our talent pools, promoting the inclusion of people from all different backgrounds. A lot of companies have their own policies, but how do we ensure that these are relevant to the trading desk itself?
“A trader cannot aspire to be a great trader on their own. Working within a team, learning from your colleagues, networking both internally and externally, are all so important to build confidence and to grow your reputation – and ultimately, that improves the end result for everyone, including your clients.
“This is a great industry that doesn’t always get the best press, but I feel so lucky to be a part of it. I look forward to working with the next generation of traders, and one of my top priorities is to be a mentor for junior traders, both on my own desk and across the market.”