Bond Traders Aren't Immune to Automation, Goldman's Chavez Says
(Bloomberg) -- Bond traders, you’ve been warned: Marty Chavez and his robots are coming for you.
That message came across during a conference call for Goldman Sachs Group Inc.’s fourth-quarter and year-end results. Chavez, the bank’s chief financial officer and a former Silicon Valley startup founder, said that part of a spending push has been devoted to analyzing how traders, salespeople and support personnel work, and automating those processes.
He entered the Wall Street debate about how far computers can push into fixed income, and in particular the realm of corporate credit, which has been the most resistant to electronic trading. A publicly listed company can have hundreds of bonds with different characteristics, helping explain why it’s harder to automate trading in credit versus in equities. Chavez has a “strong view” on this challenge, which is why the firm is applying insights gleaned from equities trading to fixed income, he said.
“Historically you would often hear people say, ‘Well, all this works great for equities or homogeneous products’ ” including currencies, Chavez said. But given the steep trajectory in computing power, machines can catch up and “can handle that extra complexity.”
He also said there is greater complexity in the equities world than people acknowledge, including options and derivatives and related trading strategies.
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