Traders of the lost Art…Bill Bell, Barclays, on the Evolution of Trading

by Peter Cocuzza & Kelly Hushin

The best presentations are the ones where you find yourself nodding your head yes and smiling because nearly everything the speaker says is so relatable – it hits close to home. That’s the sort of presentation Bill Bell gave at TradeTech USA yesterday.

Bell, the Managing Director, Head of Equities Electronic Distribution, Americas, Barclays Capital, spoke about the “evolution of trading,” noting that the amount of evolution that has gone on between the buy and sell side traders in just the last five years has been nothing short of “outstanding.” Through polling the audience and presenting detailed charts, he demonstrated how drastically different order handling was five years ago vs. today. In one polling question, he asked about the experience level of the audience. Judging by the results, with more than half the crowd having been in the business for 5+ years, it’s no wonder his presentation on the art of the trade struck a chord.

Old school (five years ago) was executing from buy side/sell side through exchanges. Now there’s a slew of pre-trade analytics. The portfolio manager decides on what to buy and sell, sends electronically to blotter, technology scans blotter (blotter scraping) to find liquidity, then it goes to the buy side trader who will efficiently execute the order into the market place using the best combination of high-touch and low-touch services.

Bell stressed that the sell side coverage has and must continue to change and evolve with the increasing needs and demands of the buy side. Buy side traders today still need a strategic combination of high touch and low touch services from their sell side counterparts.

He noted three things the sell side must continue to do:

1. Access liquidity

2. Aggregate liquidity

3. Analyze liquidity

Bell also touched on today’s challenges to the buy side:

- More order flow to trade, but fewer traders

- Too many algo strategies to choose from

- Commission management increasingly demanding

He concluded with the fact that today’s traders are not lost in their art, just smarter and more talented through better technologies and more efficient relationships. What remains most important is the relationship between the buy and sell side partners.

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