The Big Interview: Mike Poole

Jupiter’s new head of trading tells Laurie McAughtry why execution trumps automation, why relationships are top priority - and why he minds his Ps and Qs when it comes to trading etiquette.

Jupiter Asset Management, the London-based, LSE-listed investment manager with assets under management of around £47.4 billion, recently promoted former head of fixed income Mike Poole to run its trading desk. He sits down with The TRADE to discuss his career to date, his strong feelings about the future of trading – and the direction in which he’d like to steer the firm he has called home for the past 17.5 years.  

Learning the ropes 

Poole joined Jupiter back in March 2005 as a lowly dealing desk assistant. “We’d just taken on our OMS for the first time, so it wasn’t quite paper tickets, but we weren’t far off.”  

His job was to help the equity traders sort out queries, listen in on phone calls, and assist them with the organisation of elements such as IPOs and secondary offerings. “We used to have a big white board in the office, and I would put up all the information to make sure the fund managers could see. A collaborative effort has always been a big part of the trading floor here, and my job was to grease those wheels.” 

“When it comes to trading, you listen in, you learn how it goes, and you learn the etiquette. That’s the key thing about a place like Jupiter – it’s all about the etiquette.”

He saw quickly that the two-way communication between traders and fund managers was vital, and as a desk junior without any real execution experience, just wanted to take it all in. “It was information by osmosis. When it comes to trading, you listen in, you learn how it goes, and you learn the etiquette. That’s the key thing about a place like Jupiter – it’s all about the etiquette. How you’re seen, not just by internal stakeholders like fund managers, risk, compliance, but by external parties:  sell-side, brokers, ultimately clients. For example, speaking to a counterparty and taking them short $5 million-worth of risk, and then calling another counterparty because you know they’ll short you the same security, and then doing that again and again, and everyone is trying to cover the same stock – you’ll get a pretty bad reputation quite quickly in terms of how you engage with risk provision and balance sheet. It goes back to partnerships. If someone has shown you something, or you’ve sold them some risk, allow them to get out of that. Understand the market. I learned very quickly how to get a good feel for how our traders did good business, and that is something that has continued throughout my career.”  

Poole started off by helping his fund managers set up program trades and found those discussions with the PMs notably helpful in terms of understanding portfolio construction: “What it is fund managers look at, why they look at it, what they expect from us, and how we can deliver it in terms of value.” 

Jupiter also used to have quite a significant private client business, and Poole did much of the trading for that, ranging from very large stocks to AIM-listed micro caps, which was a good way to learn the ropes of pre-Mifid 1 market structure.  

“Liquidity was probably more abundant, but in those spaces you really had to understand who was doing what, and why they might be positioned like that. I spent a lot of time on the phone, to be honest, really getting a feel for the market, and that stood me in good stead for the next step in my career progression.” 

Credit crunch 

But then the financial crisis hit. Program trades dropped off, because people weren’t trading risk. Private clients weren’t trading as much, because there wasn’t as much to trade with, and an opportunity came up on the fixed income side, just as the firm was starting to make inroads into the credit space. 
“I thought about it for all of five seconds,” he says. “It was great to add another string to my bow – at that time Jupiter were really starting to push the fixed income product, so it was exciting to be on that journey. I was basically given a book about yields and convertible Greeks and told to go on holiday for a couple of weeks and learn it, and when I came back I was good to go. It’s a great way to learn. There’s nothing wrong with being dropped in the deep end, as long as you have the right support network.”

“There’s nothing wrong with being dropped in the deep end, as long as you have the right support network.” 

Initially there was just Poole and one other guy in the fixed income division – so the learning curve was steep. “I did take it upon myself to adopt more of a leadership role,” he admits. “Just because I could see that the industry was changing. Fixed income is always undergoing change. But at the time we were still doing things very manually, very slowly. That was fine, but we were only trading a small number of bonds.” 

Bull run 

The uptick really came with the arrival of Ariel Bezalel in 1998, who became a fixed income fund manager in 2000 and who kickstarted Jupiter’s credit success. Heading up the global flexible bond strategy, he manages the Jupiter Strategic Bond Fund – which has returned 110.67% since its launch in 2008 – alongside the Dynamic Bond Fund, with AUM totalling £10 billion. 

“The fund grew very quickly, the strategy was very successful, and before you knew it, we’d reached a few billion and we needed to onboard the likes of Tradeweb, Market Axess, Liquidnet, and look at different ways of executing, of accessing the market in a more efficient manner,” explains Poole. “This is a crucial point that I’ll come back to again and again. Giving the traders the tools to make the right decisions.” 

From 2011/12 onwards, electronification of fixed income started to become more prevalent, as did the use of data to access new parts of the market. As time went on, 2014/15 saw the advent of open trading. All-to-all became the hot topic, and Poole has always been a big advocate of accessing new counterparties. “Jupiter doesn’t really have the scope to broaden out its remit to 25 local LatAm brokers,” he admits. “So it was handy to have access to different pools of liquidity by utilising these platforms. In doing so, we then had capacity to hire additional traders.” 

Then in 2017, Poole was made manager of the fixed income team – and that’s when things started to get interesting.  

Leading by example 

“I felt empowered to bring more change in,” he explains.  

“I think I’m more of a carrot than a stick person. I want my team members to come on the journey with me. I don’t want to tell them how to do things. Buy-side traders don’t like being told what to do. They do like the idea of trying something that works, and then doing it again. My job is to encourage them to try something new. If it works, let’s go with it. If it doesn’t, let’s figure out why.” 

Poole is a fan of the film Inception, and he likes the idea of planting the seeds, the ideas, in people’s heads, and then watching them grow. “That slow dawning that perhaps technology can help you, that perhaps automation isn’t turkeys voting for Christmas,” he illustrates.  

“Buy-side traders don’t like being told what to do. They do like the idea of trying something that works, and then doing it again.”

“I believe in leadership that empowers members of staff to do new things, who are willing to learn. What happens if you make a mistake?  We have a very open and collaborative process around that. If there’s an error, or something we call a ‘near miss’, it gets logged in the system and we look at why it happened and how we can fix it. It’s very much a process, and it’s something that I very much encourage within the team. If anyone sees a gap in the process, I want to move away from the ‘oh, it’s always been done like that’ mindset towards ‘why is it done like that, and how can we do it better?’ That is what I see as my remit – to ensure that processes are as efficient and as streamlined as they can be.  

“I don’t look at things on a trade-by-trade basis, or ever want to say to a trader: you did a bad job. I want to look at trend analysis and understand why they’re making that decision over time, to trade that stock or that bond. Because if it’s sub-optimal, then we need to look at the decision-making process, and then determine whether they’ve got the right tools to access the market. Have they got the equipment to make that decision, or are they doing it just because it worked once, so they try it again.” 

Wag the tail, not the dog 

But there are shades of grey – and for Poole, automation is a monochrome rainbow.  

“Automation,” he muses. “There is undoubtedly a place for automation in fixed income. But automation is very dependent on how you execute your firm’s book of business. Jupiter is entirely active. Every fund manager lives or dies by their decisions, and by their alpha-generating capability. I see the trading desk as being part of alpha retention. If automation allows us to make our workflow more efficient, which means we can focus more on those alpha generative trades where we can actively add value, then I’m all for it.  

“What I’m not in agreement with, is using automation for the sake of it. I’m not in agreement with technology changing your process. I think you should use technology to make incremental gains and incremental improvements upon your existing process.  

“Not all trades are right for automation. I’ve never been a fan of the bifurcation of high touch and low touch. Every order should be treated on its own merits, and we don’t do any no-touch trading at all. The important factor is to have all the tools to achieve the best outcome on an individual trade basis.” 

But not all asset classes are equal, and what works for equities might not work for fixed income. “In the credit space, it’s slightly different,” explains Poole. “We don’t run any passive books, or any trackers. We don’t have a price-agnostic part of the business, and we don’t have to buy and sell things. We have no house view at Jupiter, that’s important – there’s no CIO telling the investment managers what to do. They make the decisions, and our job is to achieve their investment goal as efficiently and as cheaply as possible. If automation assists in that journey, then great. But if it doesn’t, then it shouldn’t be lauded for its own sake.”  

Climbing the Poole 

From managing the fixed income team, which is currently up to three, in November 2022 Poole was promoted to the overall head of trading for Jupiter – and for him, it’s been a natural progression.  

“I’ve always steered away from pure specialisation,” he says. “I think it’s important to have an understanding of all markets. Heading up the fixed income team was my first time as a people manager, and I think it’s important to recognise the value that each person adds. Each of my traders has an area they lean towards, but I encourage them to maintain the ability to work cross-market, and I think we’ve built up a pretty seamless desk in that regard. 

“In addition, I think that in some firms, the trading desk can be viewed as an operational cost centre. And we offer a lot more than that. We offer the ability to be part of the investment process – I’m not suggesting we’re coming up with ideas, but I want to empower my traders to be able to go to their investment managers and say – this might not be the right thing to buy right now. The liquidity profile, the positioning in the Street… We have a huge amount of information, we’re at the coalface getting our hands dirty every day. We should be able to turn round to them and say, with a high degree of confidence, that we have information that can assist their investment decisions.” 

When Poole was offered the head of trading role, however, he had to think about it rather more carefully. “It was a very exciting opportunity,” he agrees. “It was the chance to take on equity and FX as well as fixed income. It’s a shame that the opportunity came about because of headcount reduction, but I think it’s a chance for some areas of the trading desk to take a step back and reassess their use of technology and of data. 

“I’d like to get those parts of the desk to shout louder about how good they are. The average tenure of a trader at Jupiter is about 15-20 years. They are very experienced, they know the market very well. It goes back to etiquette; I think we are well-liked by the sell-side and the way we go about doing business – I hope – encourages people to want to do business with us.”  

Retaining relationships 

Coming full circle, Poole still believes – as he did at the start of his career (and the start of this article) that relationships are crucial.  

“Despite the onset of electronification, trading systems, data-driven decision-making, I’m still a firm believer that it’s a people-led business. Given the nature of our business, which can be very OTC and very esoteric in terms of what we’re looking at, you do require a degree of trust, and understanding between yourselves and your partners. They’re helping you to achieve your investment goal for your client, and that’s what we try to build upon.  

“In every engagement that we have with a sell-side partner, it’s a case of us really trying to ensure that it suits both parties. We have a number of electronic routes into the market, and yes those are important, but retaining and developing these relationships is almost more important than it was four or five years ago.  

“Despite the onset of electronification, trading systems, data-driven decision-making, I’m still a firm believer that it’s a people-led business.”

The Covid curse 

“I think Covid has led to a lot of people losing that element, and not realising quickly enough the value in facetime, the value in developing relationships and in-person. I think people got a bit lazy during Covid – be it meeting people, be it trading – I think people hid behind the electronification of fixed income. We certainly saw a spike in the volumes done electronically, and that then led to a difficulty in trading blocks. We’re now coming out of Covid, and people are starting to have those in-person conversations about how we can get balance sheet and risk provision from our Tier 1 counterparties.  

“The primary markets have really dried up this year, and a lot of people use the primary markets as a liquidity tool. So if you want to get a block done, and access some risk, then you need to have trust and you need to have that relationship. That will have been eroded over time if all you’ve been doing is putting them in competition with each other. If you’re going out every time with $2-5 million and putting everyone up against each other for every trade, there is an element of winner’s curse there. If you win, everyone else knows you’ve won.  

“They might not know who it is, but they’ll know someone has taken on $5 million-worth of risk. They can then position themselves accordingly, and you are off-side very quickly. The banks don’t like that, they would like more bilateral trading, and a lot of that comes with trust. The banks don’t have a lot of balance sheet to provide necessarily to every client, they have to pick and choose. It’s important, as a non-trillion dollar asset manager, that we seek to strengthen those relationships.” 

Ringing the bells 

So where next for Jupiter, with Poole at the helm?  

“There are some immediate changes I think can be implemented,” he reveals. “We currently have a cash management element to our trading desk – I would like that to become more dynamic, and more value-accretive: more cash trading as opposed to oversight of cash positions and collateral. 

“I’d also like to use technology more strategically. At the moment we use BlackRock Aladdin as our OMS, so we’re going to be partnering up with them a lot more to try and standardise views across the investment floor when it comes to how people look at cash positions especially. Data is only ever as good as understanding what you’re looking at – if everyone’s looking at a different view then when something goes wrong, you spend the first hour trying to work out what you’re looking at.  

“A reluctance to change can be an issue, and we on the buy-side often get tarred with the same brush. It can be difficult to move the needle.”

“A reluctance to change can be an issue, and we on the buy-side often get tarred with the same brush. It can be difficult to move the needle, although as an industry, I do think that (especially on the buy-side), we are more collaborative than ever. But within the four walls that constitute Jupiter Asset Management, my views are very clear. We should be looking at how we use data, we should be looking at how we use the platforms at our disposal, and how we can better utilise the technology that we pay for. We should be more vocal about the demands we have of that technology.  

“If we can fix the current internal fragmentation around disparate datasets and technology usage, I think we’ll be in a far stronger position to achieve the goals that I have in mind: which are to help the trading desk utilise their experience and skillset in order to add to the investment process, as opposed to feeling like they are fire-fighting. 

“By this time next year, I’d like every trader to feel comfortable using a dataset in order to tell a story about what they’ve traded and why. We’re quite a quiet trading desk, which is fine at times, but I’d like us to be more proactive. I want us to be able to tell our investment managers what we’ve done, why we’ve done it, and use the data to illustrate that. Then we’ll be able to demonstrate our value, and that’s never been more important for the buy-side. It’s on us, to show that value. 

“And that will happen, within the next year. That’s my role, and I’m looking forward to the execution.”