By Ambrose Tan, Head of Central Dealing for Equities, Fixed Income, Treasury, Aberdeen Asset Management (Asia).
The role of buy-side traders is becoming increasingly important – and more fun.
What are the main factors now affecting the dealing desk function?
The rapid changes taking place in the regulatory environment and keeping up to speed with these developments are having the greatest impact. As a global fund manager, the inconsistencies in different jurisdictions means we face the additional task of adhering to local laws without breaching others, for instance Dodd-Frank and the European Market Infrastructure Regulation.
Is your task becoming easier, or are the benefits of more automation and more sophisticated technology outweighed by regulatory pressure, compliance monitoring and performance assessment?
Although advances in automation improve operational efficiency and price transparency, dealing is still bound by strict regulatory, compliance and performance requirements. Automation can address the science of dealing but not the art.
What are the best consequences of new technology?
The buy-side now has much better access to liquidity and tighter dealing spreads, particularly in foreign exchange. There is still a long way to go, especially in the credit market which remains a game of axes.
Do market knowledge and personal networks still have an important role for dealers?
They are absolutely relevant and, in fact, essential. An in-depth knowledge and understanding of markets gives the dealer an edge in decision-making for trade execution.
How is the dealing desk’s relationship shifting with your company’s portfolio managers?
While the portfolio managers make the investment call, the dealing team are their eyes and ears on movements within the trading environment. This relationship remains and is even more critical with increasing information flow these days.
How is the dealing desk’s relationship with vendors and service providers changing?
We are demanding more from them as a result of tougher and an increasing volume of regulatory requirements. Also, services and products supplied by vendors are easily replicated and have low-entry barriers – as long as you have enough cash for capital investment.
What can be improved or what would you prefer the market dialogue to focus on?
Public forums within the buy-side are few and far between – and I wish there were more of them.
Is your job becoming more fun or more stressful?
Definitely fun, but with it comes the stress. It keeps the dementia away!
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