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16 December 2020

Interesting Times - or: when will it end?



This article was written by Steven Spencer. All views and opinions expressed are strictly his own.


As the debate over whether or not we are experiencing the dawn of the Fourth Industrial Revolution, albeit forced on us by the Covid pandemic, goes on, my thoughts turned to the pros and cons of open outcry trading and the value of office trading floors. Are they now superseded by AI, Teams, Zoom and all the electronic devices that have boomed in the last nine months?

Sitting in my home office, alone, looking at the pouring rain, with no prospect of any social interaction, my mind is devoid of stimulation. It must be the same for all my clients, because they sound pitifully grateful when I call them, releasing them from household chores. I can get up and make a coffee, by myself, and drink it, by myself. I can watch the prices tick up and down on the screen but it’s devoid of stimulus without the ability to mention the movements to someone the other side of the desk and get their views on what is moving the markets.

We can’t sit at our screens and “Zoom” a colleague, who should be sitting opposite us, every few minutes or even seconds, nor can a group of us come up with a trading plan on the spur of the moment as we used to around the coffee machine, in the office kitchen or by the water cooler, or even, heaven forfend, in these plague-ridden times, pop out for a quick drink after work and chew the fat. Trading strategies might be planned in a “Teams” conference call, but their immediacy and importance pale into insignificance beside the advantage of watching a colleague’s face as he ingests news over a phone call about the markets. A pale face indicates a problem, a grin the opposite.

Body language doesn’t come over Teams or Zoom either. How many times in a group meeting have you noticed a shrug of the shoulders dismissing an argument, a face turn away in embarrassment, a glance exchanged between colleagues that tells all you need to know about a problem or a secret shared. Management in a trading company has to encompass the art of reading faces, eavesdropping on phone calls and reading upside down.

And this doesn’t even cover the value of formal meetings with counterparts or customers where a discussion over a proposal, for example, is being ground into the dust by arguments over detail. I remember times when, in frustration, I have excused myself for a pit stop only to find my counterpart following me and as we stood side by side him saying “I’m fed up with this – how about we settle at X and go for lunch?” And it was done.

What is a market when it is reduced to the clicking of a mouse? Devoid of skill, aggression, excitement, transparency and efficiency. As one open outcry exchange after another has disappeared, the markets are reduced to a sterile, mind numbing, flickering screen.

Working from home instead of in an active trading team deprives the trader of the chance to use the team to opportunistically seize liquidity, hitting a range of options at the same time, increasing efficiency and profitability.

What are trading rooms without the buzz of excitement as a client order is filled or a trading strategy successfully completed?  Trading rooms have been described as being like the scramble rooms in the Battle of Britain – 90 percent boredom and ten percent pure adrenalin, which you certainly don’t get from a Zoom call.

It’s a dreadful disappointment to see the return of a full and active City delayed yet again by the latest health restrictions because the longer the delay the more we will become used to the status quo and the buzz may never return. 


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