Split Trading Desks, Clorox May Follow Banks’ Travel Bans
Split Trading Desks, Hourly Clorox May Follow Banks’ Travel Bans
(Bloomberg) -- Big banks around the world are rushing to ensure they can keep Wall Street humming through a coronavirus pandemic. The travel curbs have begun -- the next steps will upend daily life on trading desks.
Firms are prepping plans that include: Activating backup sites and splitting up teams, so if an outbreak hits one office, their colleagues can continue elsewhere. Sanitizing every surface hourly -- from traders’ desks and phones to the elevator buttons. Shutting company gyms and maybe cafeterias. Designating rooms to send sickened staff until an ambulance arrives.
It’s a snapshot of what life might look like on Wall Street and across an industry that can’t take a break as global markets swoon over the prospect the virus will run rampant. The plans were described by Regina Phelps, a four-decade veteran of continuity planning and the founder of Emergency Management & Safety Solutions. She said she’s urging clients -- which have included the World Bank, Wall Street custody giant Northern Trust Corp. and the three largest U.S. credit-card networks -- to hone their plans now for a situation that could develop quickly.
“If you get the first case in your office, you need to know exactly what you’re going to do,” Phelps said. “The health department will shut you down for 14 days. Then what?”
JPMorgan Chase & Co., the world’s biggest trading house, restricted all non-essential travel globally this week, telling employees to start testing their ability to work remotely. Citigroup Inc. also expanded restrictions on employee business travel and canceled large internal meetings that require international travel. Other major banks have curbed travel to affected regions.
It’s not just banks that are taking precautions; their clients are, too. London hedge fund Sandbar Asset Management has been testing its readiness all week by making its employees work remotely, while GAM Holding AG has been assessing its remote recorded lines should traders in London need to use them.
“If you’re a trader and you’re on the floor, you can’t go five feet without seeing a Purel machine,” said Alex deLaricheliere, the U.S. financial institutions practice leader at insurance broker Marsh & McLennan Cos Inc., which also advises companies on pandemic and continuity planning. “Most of these firms have on-site medical facilities. I’m sure those facilities are fully staffed at this point and are in overdrive with monitoring employees.”
Phelps and other consultants predict Wall Street will place personnel further apart along notoriously crowded desks. Some can work from home, but that isn’t possible for everyone. Many roles rely on access to closely guarded internal systems and third-party trading venues. For banks, it’s also easier to monitor traders for compliance and risk management when they’re in the office.
Some financial firms don’t have companywide systems for tracking absences in real time. Instead, employees who aren’t feeling well notify their managers, who make adjustments on the team. That must change, Phelps said, so that senior executives can detect potential outbreaks faster.
In the U.S., the Federal Financial Institutions Examination Council has been requiring banks to create plans for a potential pandemic for more than a decade. That includes programs to prevent an outbreak from spreading inside a firm, but also steps to continue communicating with customers.
But big banks have been publicly tight-lipped about what specific steps they may take to bolster their domestic operations. Privately, some senior executives acknowledge that they’re still trying to decide. So life on Wall Street still looks relatively normal, even as U.S. authorities shift their tone to say the question is no longer if, but when, the virus may arrive.
Still, measures prescribed by consultants can be seen abroad. As outbreaks erupted in South Korea, banks including UBS Group AG and Citigroup Inc. began splitting workers among different locations to ensure business can continue. Some locations in Europe may follow suit as the virus spreads there.
“As you can imagine, it’s a bit tense,” said Zoeb Sachee, head of European government bond trading at Citigroup.
Many U.S. banks have built backup sites so they can maintain operations for clients during storms or other natural disasters, said Michael Faber, global head of business continuity management at interdealer broker TP ICAP Plc. But those facilities can also help firms weather a pandemic.
“If you’re trading a product and you’ve got 10 people on the desk, why not move three to five of those brokers or traders to that recovery site?” Faber said. “If somebody does come into the office and potentially infects or ensures that the whole desk needs to go into quarantine, the service for the client can still continue.”
For now, traders in New York and London are concentrating on keeping up with the wild volatility of markets. By the close of trading on Thursday, the S&P 500 had its fastest correction on record.
“Busy!” said Peter Chatwell, head of European rates strategy at Mizuho International Plc, referring to the bank’s trading floor. “Full of client activity!”
--With assistance from Lananh Nguyen, Esteban Duarte, Alyce Andres, John Ainger and Steve Dickson.
To contact the reporter on this story: Jenny Surane in New York at jsurane4@bloomberg.net
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, David Scheer
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