Step Aside Wonder Woman

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For the first time in 59 years, the three highest-grossing movies in 2017 in the U.S. all featured female leads.¹

Do we sense a trend here? Well, step aside Wonder Woman—female empowerment is also alive and well on the trading desk at CIBC Asset Management.

While today there is more female representation on Bay Street than ever before, a female trader is still a relatively rare thing. At CIBC Asset Management in Toronto, Kathleen Gregoire and Anuratha (Anu) Arulanantham form the core part of the equity trading desk (along with Ahmad El Baba). Kathleen is the senior trader (“I’ve seen it all”), while Anu joined her about eight years ago. From a relative newcomer, Anu has developed her skills to the point where she now brings her own instincts and “market feel” to the trading desk.

Depending on your perspective, sitting with them can feel like you are watching a couple of surgeons, “What’s your diagnosis—are you seeing what I’m seeing?” or a pair of sports commentators, “That play is not working, should that guy still be out there?” The collaboration works for them, and works for the portfolio managers (PMs) who depend on them for their sense of the market, as well as their ability to execute.

During a brief mid-afternoon lull, they answered a few burning questions about life as professional equity traders.

 

What’s a typical day on the trading desk?

We arrive at work fairly early (around 7:30 am) to check global markets and look at futures trading (including stock futures and commodity futures—particularly important for the Canadian market). But we don’t have to be sitting at our desks to know what’s going on. Our constant connection through technology means we become aware of big news stories as they are breaking, no matter where we are.

We also mentally organize the day, factoring in the timing of possible market-moving economic releases, earnings releases/corporate news and thinking about how that could affect our trade execution.

We scan (and, in select cases, read) broker notes that include market buzz, their firm’s analysis and recommendations and other market-related information.

Once the North American equity markets are open (9:30 am – 4:00 pm) we are submitting and tracking orders. We also update the PMs and analysts during the day on any factors affecting the execution of their trades (so they can adjust their instructions if necessary).

After market close (4:00 pm), any outstanding trades are cancelled. Trade fills are sent electronically to the order management system so that stock is allocated to the correct account (different mutual funds, pension funds or other client accounts). This is a huge improvement over the days of blue (BUY) and pink (SELL) tickets and manual trade processing by the “back office.”

 

Any time management tips for the trading day?

Well, because we receive so many emails every day, we need a strategy to deal with the flood of information. Even though we are very good about clearing them, we often carry a large number of emails in our inbox and we receive another 500-1000 every day. Of course, you don’t read them all. You get a feel for which brokers will be concise and still cover all the relevant information—there is a lot of repetition.

 

What do people not understand about your job?

Financial markets don’t close for lunch (although they do in “civilized” Japan), news can break and PMs may decide to place a trade at any moment. We can’t book lunch in advance or, if we do make a lunch date, there’s a pretty good chance we’ll need to cancel it.

Even though we are a team, each person is tending to their own trades and many trades can’t be easily passed to another team member. Basically, we’re chained to our desks. That said, this is a dream job. No two days are ever the same and the market is always changing—there is never a dull moment.

 

How has trading changed compared to ten years ago?

Traders and brokers don’t talk to each other as much as they used to. Orders are usually placed, executed and confirmed electronically.

Markets move faster—high frequency trading plays a role here, but this is also a consequence of rapid information dissemination. Everyone is aware of a news event at almost the same time and, if they choose to, can act on it quickly.

Related to the last point, retail investors now share an almost-level playing field with institutional investors. Of course, institutional investors are usually trading larger order sizes, but this can be an advantage or a disadvantage, depending on the circumstances.

 

On the subject of high frequency trading (HFT), what did you think of Michael Lewis’ book Flash Boys, which discusses that topic?

Michael Lewis’ book (published in 2014) did not reveal anything new to those on the trading desk. High-frequency trading had been around for years at that point, probably since 2009. But for those who were hearing about it for the first time, this news probably seemed rather startling. In financial markets, someone is always trying to “game” the system, to achieve some advantage. That is just a fact of life for traders and it doesn’t make sense to me to complain or get angry about it. You have to find a way to do your job well and adapt to the environment, no matter what is thrown at you.

 

Kathleen, you were a trader during the bursting of the tech bubble (followed closely by 9/11), the Great Financial Crisis of 2008-9 and so many other volatile financial events. How does a trader maintain focus during those times?

Of course it’s important to stay cool and keep doing what you’ve done many times before. Especially during volatile periods, the PMs will rely on us to get a feel for the trading environment—so there is also a greater sense of responsibility. But since the PMs make the decisions about what and how much to buy and sell, the traders can focus on achieving the best execution. When it’s very difficult to achieve clarity about a particular trading situation, we (may) also have the option of sitting on the sidelines until the “smoke clears.”

 

Finally, any words of wisdom for our “Student Challenge” contestants about the specific skills or personal qualities that make a good trader?

Because traders multitask, often executing a number of trades simultaneously, a good trader will be focused but also able to frequently change that focus. You need the capacity to understand the implications of various pieces of news and market movements on the trades you’re executing. You also have to be diligent (mistakes can be costly) and a good communicator. This means not only expressing yourself well, but also understanding who has to know what and when they need to know it.

¹http://www.boxofficemojo.com/yearly/chart/?yr=2017

Kathleen Gregoire

Kathleen Gregoire

Equity Trading Desk, CIBC Asset Management

Anu Arulanantham

Anu Arulanantham

Equity Trading Desk, CIBC Asset Management