The TRADE 56 - Page 26

[ C O V E R S T O R Y | N E I L J O S E P H ] ers. And Joseph, of course, who says that the desk is roughly divided into two main groups. “I think of people as being either part of program and automated trading - those who handles orders in aggregate, either looking at automated orders and working on an almost exception management basis, adding value to a number of orders in aggregate that are being automated – and specialist traders, who typ- ically handle more illiquid orders which can be around two days’ volume on average, so it’s very much a specialist role,” he explains. No trading desk stays the same for very long, particularly not one operating under a name like JP Morgan. The organisational structure of the desk itself may have evolved over time but it is the way in which the various parts interact that has been both the biggest change and differentiator, as well as working closely with other teams. Technologists and the ana- lytics team are co-located on the trading desk in order to develop a harmonised approach to new challenges or the development of new tools, which Joseph says has been fundamen- tal as the desk handles increasing levels of orders and volumes. “For instance, in EMEA the number of or- ders per trader has increased by 70% over the last three years.” he says. “It’s a testament to our overall setup that during that same period we have seen an improvement on our imple- mentation shortfall of 6% as well. This is down “We implemented our first automated trading system in July 2009, which was probably one of the first implementations of its kind. People now talk about the ‘algo wheel’ and I think we were relatively early in building this type of functionality.” 26 // TheTrade // Summer 2018 to a mix of highly-skilled traders, well-deployed technologists and a well-resourced analytics team.” Automation, according to Joseph, is a key tool here and he acknowl- edges the skill and investment re- sources of the firm at his disposal, specifically when tackling large- scale projects such as the imple- mentation of MiFID II or manag- ing increasing volumes. This year the firm implemented the ability to automatically trade liquid cash flows across its EMEA operations, where cash flows sub $100 million can be traded 100% autonomously, freeing up traders’ time for more complex work. Joseph notes that in addition to more orders per trader, the notional traded per head over a five-year period is set to be an increase of 270%. “We need to be able to handle that kind of trajectory,” he asserts. “The number of programs we have traded over the past two years has gone up by 10 %, so we need to find solutions to allow traders to continue adding value in terms of keeping costs down while handling more volume and complexity.” While most of the industry prepared well enough in advance of the arrival of MiFID II on 3 January this year to mitigate major negative impacts, the effects on the trading desk have been noticeable so far. Joseph says that for Q1 this year there was a 30% increase in trades done via the cash desk and a 10% decrease on electronic trading when compared with the same pe- riod last year, although this was a gradual change rather than an im- mediate one as industry prepared for the new regulatory regime. “People might have been thinking a lot about the double volume caps that were published in mid-