A good time is seemingly coming soon for equities sales traders of a certain age. Financial News reports that the coming MiFID II regulations, which are due to be introduced in Europe from January 2018, are due to cause such confusion among asset managers that they will turn away from electronic trading systems and choose to interact with human beings instead.
If asset managers do this, life will become more complicated for banks which can more easily satisfy MiFID II's "best execution" requirements using electronic trading systems. It will also become incumbent upon banks to find armies of human sales trades who can talk clients through the complexities of market structure under MiFID II, and unfortunately these sales traders are in short supply.
"You don't have a lot of new talent coming through in that area because people aren't trained to be sales traders," an 'executive' tells Financial News. Because of this, he says the available sales traders tend to be in their 30s and 40s rather than their 20s and 30s.
The implication is that these 30 and 40-something sales traders who've spent the past decade struggling against the dissemination of electronic trading systems are to be granted a temporary reprieve. For the next year, while MiFID II bids in, everyone will want them to hold clients' hands. "[Asset managers] might be more concerned about using a straightforward [trading algorithm] in the early months of MiFID II," says the head of one brokerage recruiting human traders ahead of the rules."They might want to pay someone to manage that order for them, make sure they're accessing the right venues and navigating the new landscape.” It won't be long though before clients will be confident enough to use the electronic trading systems again.
Separately, yesterday was a bad day for John Cryan and Jes Staley, the respective CEOs of Deutsche Bank and Barclays, who were lambasted in the press. Both men are struggling against shareholder dissatisfaction over their bank's feeble share price. Both are being urged to do something about it - but for different reasons.
In the case of Cryan, the main criticism is that he's done a good job of "cleaning up the bank" and cutting costs, but that he doesn't have enough of a vision for future growth, particularly in the investment bank. In the case of Staley, the criticism is that he's almost too visionary and that his vision of a stronger investment bank generating higher returns isn't a viable one. If the two men copied from each other's playbook and altered their strategies accordingly, all might be resolved.
Revenue at Deutsche's investment bank has declined in all but two quarters since he took over in 2015 and has been falling in recent months. (Bloomberg)
Deutsche’s shares have underperformed banking peers by 30% since Mr. Cryan took over. He should articulate a better, more coherent picture of what Deutsche Bank will ultimately become. (Wall Street Journal)
Deutsche Bank is launching a new MiFID II related fixed income systematic internalizer before the mandatory deadline for banks in September 2018. In this way, it hopes to win market share: "By registering early as a systematic internalizer, we will be in a position to help clients by taking on post-trade reporting duties as soon as the obligations come into force.” (Bloomberg)
Deutsche Bank says it will put over 150,000 lines of code from its electronic platform Autobahn into the public domain. To start with, it will share the code with the Symphony messaging and collaboration platform. (Finextra)
Ex-Barclays CEO Antony Jenkins semi-gloating over current low share price (When Jenkins left the shares were 260p, now they're 190p). (Financial Times)
Senior French banker in London: “Personally, I am preparing for life in Paris. Unless we get a (soft) Brexit deal, it’s almost inevitable." (Reuters)
BNP Paribas Securities Services is using artificial intelligence to help manage trade matching delays. (Finextra)
Banks are spending more time talking about machine learning than MIFID II on conference calls. (Bloomberg)
The Bank of England’s QE buying was carried out in a secret room on the first floor, reached by windowless, stone-clad corridors that give the impression of walking towards a fortress turret. (New Statesman)
A reminder that banks by no means have a monopoly on bad bosses. (The Cut)
Be glad you didn't become an academic. (Bloomberg)
Two former bankers (one an ex-Merrill derivatives trader) have retrained as GPs after their child was stillborn: "The only leftover from our previous lives was our Porsches." (Daily Mail)
Your risk preference is an enduring trait, like intelligence. (New Scientist)
How to avoid being too nice. (The New Potato)
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