How the relationship between the buy side and sell side has evolved
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Transcript of How the relationship between the buy side and sell side has evolved
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How the Relationship Between Buy-side and Sell-side has Evolved
October 2016
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Greenwich Associates
Drivers of change are numerous
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• Economics: Monetary policy around the world is like nothing we’ve seen in our lifetimes. The US is (sort of) growing while the rest of the world can’t shake the credit crisis.
• Regulation: Dodd-Frank was the largest overhaul of financial markets in decades; Basel III’s impacts are staring to hit home; MiFID II and EMiR combined make Dodd-Frank look like child’s play.
• Politics: Brexit and the US presidential election have created enough political uncertainty to keep us all busy for a while.
• Technology: Innovation both within Wall Street and outside is disrupting business as it did in the late 1990’s – but with actual profits this time.
Which of these is driving the most change? Which are cyclical and which are structural? There is no single answer except change is inevitable.
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Greenwich Associates
Tell me something I don’t know
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• Research and information are more widely available via digital channels, making it harder to tell clients something new.
• Self directed trading by investors continues to grow across asset classes, particularly in fixed income.
• Trading remains concentrated with an investors top few counterparties.
• Fewer dealers are able to provide balance sheet as they once did
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Greenwich Associates
Trading desks are smaller but more efficient
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• The doing more with less is the reality
• Execution quality and client service are still differentiators, but the skills needed on the desk to provide and promote those differences has changed.
• Desks keeping the best and brightest, with a constant focus on “upgrading”
• Relationships are still key, but the value of entertainment is trumped by actual service quality
• And last but not least – leveraging technology is a must
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Greenwich Associates
E-trading isn’t the only place innovation is needed
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• Leveraging technology can make the “upgraded” sales desk even better despite fewer bodies.
• Using data to enhance client relationships is key, but doing so well requires properly:
• Collecting every relevant data point
• Analyzing collected data to produce usable outputs
• Putting those outputs into use both internally and with clients.
• Few of our study participants believed they hit all three points, but all had plans to up their efforts.
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Kevin McPartland+1 [email protected]@kmcpartland