Mostly… fixed income and cross product eTrading

June 19, 2007

Gazelles and Lions

Filed under: 2015, etrading — holky @ 6:12 am

Why are buyside just accepting what’s on offer in the etrading space and building their workflows and trading behaviour around that?  Why aren’t the buyside collectively getting vendors and platforms to build the functionality they want? 

If the answer is that without the sellside bought-in the venue would hold no value, consider whether a bunch of gazelles always collecting in a certain place would attract lions. The analogy being if it’s the right buyside gazelles who are going to be gathering at a particular watering hole, then I know of no sellside lion who would resist getting involved with such a pool of customers .. whether that particular watering hole is the lions natural habitat or not.  

If the gazelles got clever then the analogy of buyside gazelles and sellside lions might not work.. so instead we have buyside lions waiting to ambush those poor sellside gazelles as they wander into unfamiliar territory. Or who knows, maybe even different types of animal that can happily co-exist without eating each other 🙂

So going back to the first question, why aren’t the buyside stepping up to drive this?   Sure, there are a few buyside firms with a voice on etrading topics, but the rest are just being gazelles, taking whats on offer and building their workflows and daily behaviour around that.  Is that really such a good strategy?

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5 Comments »

  1. Holky, are you suggesting a Buyside consortium? :O

    Call it Buyside Battalion?

    One problem, as I see it, is that FI e-Trading is important to them but not as important as it is to the sellside.

    Having worked on both sides, the actual point of execution is a far bigger deal for Banks than Funds. For a Fund/Hedge Fund the biggest issue is getting to the investment decision, with execution being the last part.

    Comment by waratah — June 19, 2007 @ 10:24 am

  2. If you leave naming to me then a group discussing Buyside And Sellside Trading And Realtime Distribution, would be called B.A.S.T.A.R.D., and this name will be abused going forwards with lines like ‘get all the bastards all round a table’ … but i digress.

    I think ‘e’ is prioritised far higher in the sellside as there is far more low hanging fruit in terms of achieving STP to reduce (or at least not increase) the people overhead in distributing product and doing / capturing / processing these trades, then scaling the infrastructure to allow a greater clientbase to bring in more of this flow…

    But strategically ‘e’ should be as-important at buyside. Otherwise how can you guarantee easy access to liquidity in the specific products and types of transactions you need in order to achieve the long term alpha you seek, while just building around what e-products are on offer, even if its currently quite comfortable hanging-out with the other gazelles? My advice would be to be a b.a.s.t.a.r.d. and get involved in the discussion to define your e future, which IMO doesn’t have to be painful or onerous or expensive initially – just open ‘involvement’ in the discussion.

    Comment by holky — June 19, 2007 @ 2:47 pm

  3. One way to truly get the buyside jumping is for the Asset Management Consultanmts like Mercer, Russell etc to start setting it as part of the criteria for manager selection/recommendation.

    That would put the cat amongst the gazelles….or whatever the saying is.

    Comment by waratah — June 20, 2007 @ 7:30 am

  4. One last point, I know some ECN’s have tried to get a Buyside Forum together, much like the Sellside Forums most have. Essentially the interest was on par with mine in Second Life etc! 🙂

    Comment by waratah — June 20, 2007 @ 10:17 am

  5. […] FIX-ness and techy-ness of the Global Fixed Income Committee, so instead it is seen as a [gazelles and lions] high-level and no-holds-barred open discussion group for fixed income etrading/e-distribution, […]

    Pingback by Gazelles and Lions, part 2 « Mostly… — June 27, 2007 @ 7:53 pm


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