With a diverse career spanning three decades within buy-side trading, Richard shares his personal experiences and views having worked in trading rooms around the world.
You’ve been in the financial industry for an impressive 30 years, how did you come to choose this profession?
"I think my interest was piqued in the second year of Uni when we had to choose my course major and the Finance professor stood up and said “Red gravel drives and BMWs, do Finance”, then sat down again! I don’t have either of those but it was that humorous introduction that set me on my future career course.
I loved the fact that in this industry there is not necessarily a right answer, that no two days are ever the same and that history repeats but also doesn’t. To me, Trading is more than just executing an order, it’s the information traders gather in their interactions with brokers that are just as valuable as a good execution.
These aspects of the industry have kept me jumping out of bed each morning for so many years, reading up on the night’s events and trying to translate what it all means for the positions we hold and the world at large."
Your profile is very unique as you have worked in London, Hong Kong and Australia – how do you leverage your experience, knowledge and skill set?
"I don’t think there is one part of our industry that has changed as much as the Trading desk."
"Analysts and PM’s are basically still using the same techniques to evaluate companies they were 20 years ago but Trading has gone from static pricing and verbally placed orders to sophisticated order and execution management systems with live pricing and electronic/block trading platforms and very different market structures.
Regardless of where they are, by and large, Trading Desks are doing the same thing but to varying degrees their processes and systems have historical hangovers which detract from a Trading desk’s productivity. This is where I have added value."
"I’m a bit of a process efficiency nut because I don’t think anyone should spend more time on something that doesn’t add any value."
"Why mouse click 4 times before I can get an order to market? It’s a waste of time.
Extract efficiencies using technology and there is more time for Traders to add value for their analysts and PM’s."
How would you describe the differences in trading culture between the continents you have worked in?
"On the trading side I’d say the Brits are probably most similar to the Aussies, we’ll get out there and have an educated swing."
“Asian culture is a bit more demure which is why VWAP is still a favoured benchmark.
On value-add to the analysts and PMs, this is where cultural mores also come to the fore. Some cultures are more willing than others to put themselves out there; everybody fears failure or ridicule but you’ve just got to start. If you’re dealing with reasonable people they will appreciate what you’re trying to do and help you drill-down on what’s important to them. Kick a few goals though and it becomes self-reinforcing."
With such a diverse background with geographical variation and skills ranking from quant to high touch; are there any areas that you particularly prefer or miss?
"Not really. I started in equity derivatives, left the desk for a while doing some top- down portfolio management then back again doing cash equities before a short stint on the sell-side. It’s great that within this industry there are so many paths you can follow."
"I do question sometimes whether the evolution of the market structure we have today; fragmentation, tighter spreads with less volume on the touch and the prevalence of electronic trading have really been advancements for market efficiency. Prior to moving to London from Sydney, I could comfortably execute a 20% ADV order and push that to 40-50% by finding clips to cross with minimal market impact. On my return 5 years and a second exchange later I was shocked at how easily a stock would move. Now it feels like a 10% ADV order can have a noticeable impact. Is that progress?"
Highlights of your career to date?
"The highlight has been that I’ve managed to survive 30 years in the industry! Sure, there have been highs and lows; a couple of hiatuses out of the industry (9/11 and the GFC...market timing is definitely not my strong point) but I’ve been fortunate enough to bounce back from the lows.
It’s an interesting time to be in the Australian market. Yes, the local financial industry took some lumps from the GFC but the rest of the economy actually didn’t do badly thanks to a resources boom. Post that boom the economy managed to transition nicely too. I think we’re into the 26th year of uninterrupted expansion.
That has meant that the country’s superannuation (pension) pool continues to grow and now exceeds A$2.6t, probably the third largest pool in the world. And this is real money, not a government promise of a pension, controlled by each employee as to where and who manages it.
With this growth, local managers have expanded their offerings into locally managed regional and global products. The growth has been enormous and with the depth of talent here I think this bodes well for Australia to assume a more prominent asset management role in the region. Hopefully I’m around to see it flourish."
Generally, what are the challenges of working on the buy-side?
"Expectation management, especially if you’re remote from your PM. It helps to have good lines of communication, both ways, so a mutually satisfactory outcome can be achieved."
What are your top 3 tips to a successful career in buy side trading?
"Focus on your current job. If you do that well and you’re in a good firm, career progression will take off itself."
"Be honest, be fair. We’re all human and we all make mistakes. It’s how we go about addressing them that makes or breaks reputations.
Have fun. Our jobs can be quite stressful but you don’t have to be Mr/Ms Serious all the time. A bit of humour at appropriate times does wonders to diffuse a situation."
Do you have any interests outside of work to help counteract the potential challenges associated with being Head of Australia and Japan Equity trading at T. Rowe Price?
"I have diverse interests. I like to find things that completely take my mind off work. Being somewhat analytical I like pulling things apart and putting them back together again to see how they work, hopefully with no leftover parts. I enjoy the challenge of keeping things running; I have my grandfather’s lawn mower from 1973 and a tricked-up 2006 desktop computer, both still humming along.
On longer breaks I go help out on a friend’s cattle farm 300km from Sydney. I like driving and take my car out for track days. I enjoy cooking too."