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fficiency. That is the watch-
word for AllianceBernstein,
says Jim Switzer, global head
of credit trading, who believes it will
cure the evil of illiquidity in the bond
markets.
The company has been on an
efficiency drive since Switzer joined
in mid-2011. His background on the
sell-side with Societe Generale and
UBS Principal Finance, where he
worked on the proprietary trading
desk, helped him look through a broad
lens for AllianceBernstein, at a time
when the market was going through
its most significant upheaval of the
modern era.
“When I got here everyone in the
market was talking about liquidity and
how poor it was,” says Switzer. “Deal-
er balance sheets were down and
“We can be a price maker, but
to think we’re going to solve
liquidity problem is short-
sighted.”
electronic platforms were popping up
everywhere. While we recognised the
liquidity issue I thought the biggest
problem was efficiency. Until we
solved the efficiency issue we weren’t
going to be able to solve the liquidity
issue.”
For Switzer, who oversees some
$135 billion in credit assets, efficiency
encompasses three things: processes,
people and technology. The company
got straight down to it beginning with
changing personnel on the trading
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Summer 2017
S W I T Z E R ]
desks. The idea was to transform
trading from a pure clerical, execution
model to one which required exper-
tise in markets. The result was hiring
experts in relative value, cash and syn-
thetics who could buy into the trading
process and offer new trade ideas and
risk management for clients. Getting
the people in was important given the
wider changes the market has gone
through in the last seven years.
“Because the dealer community is
moving to a riskless model instead of
widely broadcasting their positions
dealers are making targeted, discreet
phone calls to select institutions,”
says Switzer. “We want to be on the
receiving end of those calls so we need
to make sure our traders are knowl-
edgeable and empowered to act.”
The issue of liquidity has, of course,
impacted AllianceBernstein’s fixed
income business—like it has with the
rest of the market. These days it is no
longer possible to put an investment
strategy first—the initial consideration
is whether it is possible to source
liquidity in the underlying asset.
“Before liquidity was at the end of
the process—now before you do any-
thing you have to think about liquidity
first,” says Switzer. “The question is:
‘is it executable?’. Everything we are
doing revolves around this process.”
Seeking ALFA
To solve the conundrum, Alliance-
Bernstein has people from research,
fundamental analysis, quants and
trading all having a seat at the table. In
total Switzer has a team of around 24
traders working under him. It has also
been looking to go global - it currently