Trading Bosses Worry About Newbies Who Missed Election Crucible
(Bloomberg) -- Four years ago, Citigroup Inc.’s Dan Keegan spent time on election night scouring for still-open pizza places to equip his traders for a long night ahead. This year, he had to settle for some rousing phone calls instead.
“Some of the pomp and circumstance associated with being on the trading floor was lost in translation,” said Keegan, the bank’s regional head of markets and securities services. “Unfortunately, in the current environment, we are not sharing pizzas across the floor and/or huddling in large groups. It is what it is.”
By all accounts, Wall Street’s biggest trading shops handled the buzz of activity surrounding the U.S. presidential election smoothly. It follows the 2020 trend of work-from-home being more seamless than expected, as the largest banks head toward their first $100 billion year for trading revenue in more than a decade.
But executives are concerned that a generation of brand-new traders are missing out on more than just pizza. As the pandemic keeps them out of the office, junior employees aren’t getting the chance to be steeled and tested in high-pressure moments. And the fear is over whether they’ll be ready for the geopolitical event when they’re not expected to watch and learn, but to handle orders and manage risk.
“As a trader, these types of events -- days that are busy and unexpected -- are what you live for,” Troy Rohrbaugh, head of global markets at JPMorgan Chase & Co., said in an interview this week. “You look back on your career, you talk about the day you were in on Brexit, or when Russia defaulted.”
Election week has become something of a rite of passage for young Wall Street traders, with many camping out on the desk until the wee hours of the morning. In pre-pandemic times, they would learn the ropes by being assigned tasks by colleagues on the desk, such as booking trades, one banker said, asking not to be named discussing internal matters.
But while they’re working remotely, less-experienced staff can’t do as much because banks’ strict compliance systems won’t allow them to handle transactions that put money at risk, the banker said. Instead, they’ve often been told to listen to market chatter, follow chats and read research. That risks forming a chasm between what analysts or associates hired just a year apart have experience doing.
“I can’t see a substitute for physically observing everyone trading,” James Masserio, co-head of equities and equity derivatives for the Americas at Societe Generale SA. “The junior traders and the junior salespeople is something that I think has been a challenge really for everybody. There’s so much that you gain in those early years.”
Executives are trying to replicate the kind of apprenticeship model they spent years cultivating in the open-area trading floors. Citigroup’s Keegan said his firm has attempted to bring junior traders into more of the preparations for big events like election day. And many managers are building in more video meetings with their teams than they would in person, said Nasser Khodri, president of the capital markets sell-side business for Fidelity National Information Services Inc., a financial technology firm.
“There are more virtual events that are taking place, people are more purposeful and thoughtful about it,” Khodri said. “For the first-timers, I think it might be difficult, but the hope is that with their knowledge of the use of technology -- and they’re quite savvy with it -- they’re able to cope.”
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