Morning Coffee: The many reasons traders shouldn’t start at 0630, and vanity pigs of the successful bankers
The end of daylight saving time brings with it darker mornings, and those dark mornings make a good time for asking perennial trading desk questions like, “Isn’t this horrible?” and, “Why are we here so early?”. Ask anyone in practically any kind of sales and trading job in London what the worst thing about working in the securities market is, and they will invariably reply, “The early starts”. Now there’s a campaign to do something about it, led by the Association for Financial Markets in Europe, which wants to shorten the length of the trading day from eight and a half hours to seven hours.
Their main stated reason for the suggestion is that nobody actually seems to make use of one of the world’s longest market opening hours. A third of every day’s volume on the London Stock Exchange goes through in the closing auction, which happens in the last five minutes of the day. There is a vague sense that if the other two thirds of the day’s equities trading was forced into a shorter timespan, there would be more balance, more time to absorb newsflow and potentially better liquidity.
But as well as the technical arguments, people are also pointing out that the current market setup is just extremely bad for the people who have to work in it. An 0800 market open means that earnings announcements and other market making news has to come out at 0700 so that people have time to read it. That means that traders need to be at their desks, with computers switched on and cups of coffee bought at 0630 to be ready for it. Assuming an average commute, that means getting to the train or Underground station no later than 0520, so the alarm clock might as well be set for 0430. And it’s possible to do similar calculations for other markets like futures or credit; things just start too early.
Not only is this the sort of thing that takes a toll on people’s health, it means that any attempts to improve diversity on trading floors are doomed because the way the job is organised is not compatible with any kind of normal family life. So the desk is not only dominated by men, it’s dominated by men who don’t see their children for days on end and who speak to their spouses in tired grunts.
The one person you might expect to have some solution, or at least life hack to help deal with this is Bilal Hafeez, Nomura’s former FX strategist cum wellness guru. Unfortunately, even Hafeez has no solution. Instead, he points out that opening hours are early for a reason. - It's not that traders are masochists. It's because people in charge of trading businesses have always realised that if you’re open five minutes before the other guy (particularly during the golden hours when London time zones overlap with the U.S. and Asia), you can take market share. And it’s that fact – combined with regulatory fears that trading might move from public venues to dark pools if they don’t shorten their hours – which is unfortunately likely to mean that the wealthy suburbs where bankers live will continue to be the only places where you see someone riding on public transport at four in the morning who isn’t a cleaner.
Elsewhere in the world, if someone told you they were spending “low seven figures” every year on their livestock, you would probably ask when they won their last horse race and if they could get you Derby tickets. But Chris Andersen, a high-end investment banker with an eponymous Manhattan advisory boutique, has been spending that sort of money on his pig farm for the last ten years. He has been known to import sacks of chestnut flour from France in order to feed his Hungarian Mangalitsa hogs, and without too much agricultural knowledge, we think we might have the reason right there why the farm isn’t making money.
“Lifestyle farming” is apparently the name given by tractor merchants and other service providers to the apparently growing trend for rich people who haven’t heard what a delicatessen is for to spend time and money well beyond the P&L of a normal family farm on growing their own luxury foods – in the case of Mr Andersen, a locally grown equivalent to jamon iberico. If you’re rich enough, you can choose the extent to which you get involved in the actual muck and sweat and pay a real farmer to do the rest. As Wall Street hobbies go, it’s probably less destructive than powerboating. Fun fact: Lamborghini do an excellent agricultural machinery range.
It’s not just the American MidWest where Goldman bankers are eating chain-hotel meals in towns without an opera house – they have fifty bankers chasing mid-market deals in Europe now too. (Financial News)
“Redemption may be too strong a word”. It might also be a word that Brevan Howard is sick of hearing, given the decline from $40bn of AuM in 2013 to just over $6bn in February. But the performance issues have clearly turned round and inflows are returning, as Alan Howard hands over the CEO job to concentrate on his own fund. (Bloomberg)
There’s a slightly predictable quality to the way in which Democratic Presidential candidates pick fights with billionaires and billionaires are unable to resist the bait. This week, Jamie Dimon accuses Elizabeth Warren of “vilifying successful people”, she says “it’s only fair that he and his billionaire friends chip in”, and they both get on television. (Business Insider)
HSBC’s global head of investment banking has held an executive conference call to discuss the fact that the bank has had a second warning about its conduct risk controls. (Bloomberg)
Chronicle, the Google business which was meant to leverage Big Data and AI to provide corporate cybersecurity, has closed (Vice)
One day someone’s calling you his “brother”, another day you’re testifying against him in court. That’s life in the world of shipbuilder investment banking apparently. (Bloomberg)
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