My role on paper may seem to be that of a next generation trader, but it’s perhaps surprising how many of the company’s projects touch the dealing desk. As a result, I can end up working with a range of teams across the business every day, although ultimately my job revolves around managing risk. As a company, inheriting risk is what we do – it’s certainly not a case of taking on as much risk as possible, but more about ensuring we take on the ‘right’ risk at the right price and with the correct degree of liquidity. Fast-paced, creative and innovative.
To help achieve this, I work closely with a range of institutional counterparties, and as a business we understand the importance of having strong relationships here. Knowing what works for the people we’re dealing with may look like a holistic approach, but in reality, it serves us very well. So that can mean working with institutional accounts to help them lower their market impact and reduce their cost of trading; or liaising with the 15 or so liquidity providers we work with. Having frequent conversations with this group about performance helps them price more aggressively and reduces our costs by matching their liquidity with our externalised flows.
If there’s one common theme that holds this all together, it has to be the data. Having this in sufficient volume and quality, along with our knowledge of how to interpret it makes those conversations with counterparties easy and constructive as both sides always have hard facts rather than opinions to contribute. To support this, we’ve built genuine strength across our in-house quant and data science teams, giving CMC Markets a sophisticated operation here and that continues to grow as the business uses its significant internal flows to become a liquidity provider in its own right.
Investment in these day-to-day relationships yields real benefits too, as by their very nature risk profiles can change quickly and we need to react quickly. A good example here was the widely reported spike in demand for Silver as retail traders speculated that there were gains to be made. By harnessing the abilities of the desk and maximising our internal liquidity, we were able to maintain market depth, consistent pricing and a high degree of internalisation, ensuring a high level of service throughout. Those solid relationships with our institutional counterparties certainly help in situations like this.
The constant need to innovate our own products and proposition also results in frequent liaison with departments like the in-house IT development team, helping them better understand aspects such as how we can achieve lower latency trading, or service the ever-evolving demands from clients. Ultimately however, the blend of market experience and data analysis skills on the trading desk leaves us in a very strong position to continue delivering what I believe is a market-leading proposition.