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Spotlight-blackExecution Consulting (more stories)

01 December 2011

Global Trading in 3D: A Virtual Execution Partnership in 2015

You’re a trader for a global asset management firm. You're sitting in a leather gaming chair. It’s comfortable.

You’re a trader for a global asset management firm. You are sitting in a leather gaming chair. It’s comfortable. You have a headset on that covers your ears and face and puts a series of three-dimensional monitors before your eyes. Your dominant hand wears a thin electronic glove that you barely notice.

Through your visor you can see alternative versions of the same data sets presented in an organizational structure you find most useful. You’ve set up customized views of the various relationships between the instruments you trade and you can gross-up the ebb and flow of pricing behavior into a montage of exposures.

A trading instruction arrives from your portfolio manager in the form of a visual picture, perhaps a heat map of some sort, which shows the multi-currency changes in exposure the portfolio manager wants to make across segments of his fund. The trading instructions you receive carry an imbedded data set that holds the underlying variables and assumptions that the PM used in making his investment decisions. That data set and the reallocation of exposures is now input into your analytic views of the marketplace on your screens and into the algorithmic trading models you may decide to use for this trade.

You run a series of analyses in real time that you then move around your virtual screens by simply shifting your index finger up and down and around. You like one of the combinations of securities, execution times, prices and trade parameters that appear as one of several proposed trading solutions. You give the strategy a name, something your sell-side sales trader will get a kick out of.

Now it’s time to “pick up the phone.”

You flick your finger again and a snapshot of your trade data and strategy analysis is transmitted to your sales trader. “Take a look at this and let me know what you think. The PM’s chomping at the bit on this one, so time is of the essence. Thanks.”

When he sees your trade pop up before his eyes, your sales trader chuckles at the name you chose. He opens up the file and suddenly sits up. He’s noticed the unique angle in the proposed trading strategy you’ve come up with. He whispers a compliment on your analysis. You hear his voice through the speakers in your ear. 

Then your sales trader restructures one or two components of your trading strategy, augments your data set with a snippet of quantitative information, alters some of your algorithm parameters using correlated securities’ liquidity profiles and sends them back to you in the form of a strategy widget attached to a new heat picture of your optimal trade solution.

“I have an idea about this segment of your trade,” the sales trader says. “You’re going to want to take a look at what I just sent you. My guys have just released a new component to that algo that I think will do a better job at optimizing your increased exposure to mid-cap Brazil.

"Take a look at the correlation data I included. We’ve seen an opportunity to capture momentum more effectively if we take a bit broader look. If you’re as time-sensitive as I think you are, let me know as soon as possible whether we’re a go.”

“Nice work, thanks” the sell-side trader hears back. “I’ll be back to you in five. Gotta run this idea past my PM, but I think he’s gonna like it.”

Spotlight-white-trans For more stories in the Execution Consulting Spotlight Series click here.

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