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With an impressive 38 years of trading experience tucked securely under his belt, John Sanderson, Senior Investment Dealer at Kames Capital shares his personal journey from when he first joined the world of trading to over three decades of changing trading landscape, including the challenges he had to overcome in his extensive career.
“While studying economics during my last year at school part of the course covered the Stock Exchange. I was immediately hooked and wrote off to half a dozen Scottish brokers.
I was fortunate enough to get more than one job offer and started to work for a broker called Campbell Neill and Co. The first week I was shown around the various departments and at the end of the week was told that as of Monday I’d be going down on to the market floor as a “Blue Button” for a trial period. Two years later there was a bit of musical chairs between dealers moving to different firms, and I was approached by an Edinburgh-based firm Bell Lawrie MacGregor, now part of Brewin Dolphin. Two weeks later I sat and passed my dealing badge, which consisted of being asked half a dozen questions by various members of the Stock Exchange committee and senior dealers of the floor. That was also where I first gained the nickname ‘Sticker Sanderson’, a name which I don’t think I particularly warranted…well maybe a wee bit!
Being on the floor of the Glasgow Stock Exchange was a fantastic experience and excellent training for my now 38 years in the business.
Be it working out what ‘2-4 in a 100, 1 end ¼ 2p out the other way’ meant or dealing in fixed income securities and getting quotes in 1/64ths, 1/8ths or 1/4s my mental arithmetic definitely improved!
The market was full of characters and a microcosm of society. There was plenty of fun, including watching one of the older members on the floor practicing hitting a rolled up bit of paper with his new golf clubs, only to take a massive divot out of the newly- laid cushion floor that had only been laid the previous weekend. Four years later when the floor closed the divot was still there!
At the beginning of 1986 I moved through to Edinburgh to help set up the dealing desk. In the October of that year I experienced the advent of Big Bang, then the demise of the floor-based market followed by the beginning of screen-based trading. Whilst this speeded up trading and volumes massively increased, so too did volatility and in the following year not only did we have the Hurricane but the crash of ’87.
Prices couldn’t be changed quickly enough, the yellow strip (best bid and offer), wasn’t yellow and telephones weren’t answered. You ended up calling a market maker whose bid was way lower than anyone else because they might at least answer the phone and when they did the price was probably that anyway!
Twelve years later I moved to the buy side at Aegon (now Kames) where Adrian Fitzpatrick had recently joined and was building a centralised dealing team. The move from poacher to game keeper turned out to be fairly straightforward!
Instead of speaking to the jobber/market maker it was now the sales trader who wanted to be your best friend. That made the transition fairly easy - when you were a broker XYZ was maybe in a 100K, but the size that was made to a “proper client” was 3 or 4 times bigger so that made things a lot easier, also being able to see IOIs rather than only posting them. I couldn’t believe how easy this side was. Well in the first few weeks I thought that!!
We developed an OMS (initially from Lotus Notes then eventually moved to a vendor-based product) rather than paper tickets, direct lines to virtually every broker, and we had both Bloomberg and Reuters, but the process was virtually the same, except I had to input the trade details so my typing had to improve. The biggest change for me was getting my head around the fact Aegon traded any regulated market you could find. For the previous 17 years I had only ever dealt in the UK, and maybe the odd trade in IBM or Large cap European stock. That was a real eye opener but great fun at the same time. Also the size of the business was much larger than I had previously experienced, rather than getting the last quarter or half, to pay a research bill, I traded the full order, and that could possibly take a few weeks to execute.”
What drives you as a person to be successful at both work and home?
“Motivation comes from the buzz of being part of the market, getting the best price and knowing which broker or venue to trade with and beating the anticipated cost of the transaction. Going home after a long day always feels better with a stack of well executed trades behind you.
I also love the buzz of the trade; chatting with the brokers, getting the feel of the markets and providing market colour and trading expertise to the fund managers.
People are another reason why I love the job, I’d much rather talk for 30 seconds on an order, than read 100 IB messages that I have probably been slow in replying to, but with the cut backs on trading desks I can understand the rise of IBs.
Also you have to enjoy what you do otherwise there is no way that I could still get up and do this after 38 years.
I have been fortunate to meet so many different people from all walks of life on all sides of the market and have had the pleasure of working with some of the best in the business, and most have interesting stories to tell and a few have become good friends which I hope will continue long after we leave this business.”
What is the greatest challenge you have had to overcome in your career thus far?
“My challenges ahead include helping the team to think of smarter and more efficient ways to execute our business, be it risk block trading, traditional high touch, low touch, Dark and ensuring that we keep on the right side of regulations."
"At the time of writing we are four weeks from the implementation of MIFID II, which brings us to a whole new ball game, with SIs, volume caps in dark trading and Conditional venues. I suspect that this could be bigger than Big Bang. Is this us trying to get business back to the Exchanges? Maybe by the time you are reading this we have a slightly better understanding of how the new trading landscape will look, and we can all look forward to MIFID III.
But if you really want to know my biggest challenge over the years it’s still those pesky fractions; is 9/32nd better than 17/64ths??”
Do you have any hobbies or interests outside of work and do you get time to fulfil these interests?
“Outside of work, I love travelling and have been fortunate to visit many countries. A few years ago my wife and I bought a place in France in the foothills of the Pyrenees and that is a great bolthole. The only trouble is that virtually all our holidays are spent there and the first week is usually on garden maintenance which is not my forte!
In the last few years I returned to tennis and after a busy day that is a great way to get rid of any frustrations that have built up. I also try to play golf but my handicap has been fairly static around 17/20 for the last 25 years, having the touch of a blacksmith on the greens doesn’t help.”
What are the top 3 qualities you feel are important in a buy-side trader?
“My top 3 qualities for a buyside trader: Ability to communicate; be adaptable; have a sense of humour”