Your Guide to the Ultimate Trading Floor
The race for space from New York to London is on as firms look to build the ultimate trading floor. Following a period of so-called trading floor shrinkage, it seems the giant, state-of-the-art trading floor is back with a vengeance.
Whether their existing floors are aging and it's time for a technology refresh, or they simply want more space to house their trading groups in a single building, firms are vying for top trading space. From JPMorgan to Goldman Sachs to Bank of America, the development details have been flying -- who's taking which space and when will they finish construction? And of course, how many square feet will these state-of-the-art trading floors occupy?
But floors aren't getting bigger simply to accommodate more traders. Rather, they are changing with the changing business climate. Broker-dealers are reorganizing their trading floors to incorporate multiple asset classes instead of recreating the traditional siloed product environment. The goal is to service clients from a cross-product perspective. In addition, broker-dealers are restructuring their floors to bring in technical support, operations, compliance and even analysts to sit closer to the groups that they service.
The ultimate trading floor ultimately depends on the business type, the firm's goals and where the firm is headed. As such, the design, planning, construction and utilization of a trading floor varies widely and is unique to each firm. Further, many are constrained by space, power supply and building layout.
Then there's UBS. UBS' trading floor is the largest in the world -- just check the Guinness Book of World Records.
UBS designed and built its trading floor from scratch to accommodate 1,400 seats and more than 5,000 monitors. The single floor trades commodities, equities, derivatives, fixed income and foreign exchange, among other products. The building resembles an airplane hanger and handles more than 1,689,000 transactions per day, according to the firm. Located in Stamford, Conn., the trading floor itself spans more than 100,000 square feet -- the size of approximately two football fields.
Apparently, after a period of contracting trading floors to achieve operational efficiencies and spreading them out geographically for disaster recovery purposes, the big floor is back.
"We're starting to see the mammoth trading floors being built. ... We're seeing 1,000-[seat] floors," observes Larry Tabb, CEO of TABB Group. "They're building these floors so that they can start consolidating traders and putting them on the same floors." Tabb notes that large floors require a significant amount of planning and bandwidth from a technology standpoint. Access to telecommunications, power and space all are major issues, he says.
UBS' trading floor is the giant of all giants. And according to Larry Leibowitz, managing director and COO, Americas equities, for UBS Investment Bank, the planning never stops. [Ed. note: As AT went to press, Larry Liebowitz left UBS to join NYSE Euronext as EVP and COO, U.S. products, NYSE Group.] "It's a constant evolution, not a revolution," he says of the floor's design. As electronic trading continues to proliferate and extend into other product areas, Leibowitz explains, trading floors will need to continue to evolve to meet changing business models.
The giant UBS trading floor was completed in 2002, when a 36,000-square-foot expansion was built onto the firm's existing Stamford trading floor. Leibowitz says UBS' decision to concentrate trading on one floor was partly based on business growth and partly on the desire for traders to work together more than they had previously. "A trading floor of this size gives us the maximum flexibility," he says. "The business will constantly change, and having the space makes it a little easier to anticipate or react to the changes."
As for the current configuration of UBS' trading floor, Leibowitz continues, it was arranged to maximize communication among groups on the floor. "For example, in cash trading and derivative trading there's overlap between the products, so the ability to reach out and talk to people in each of those groups and have informal conversations in addition to the more formal ones makes good business sense," he says. Leibowitz adds that the sales traders are arranged close to the traders for the products they cover. "There are a couple of rows of traders and then rows outside of them are sales traders," he describes.
Will Sterling, head of global direct execution at UBS, says the trend toward building client relationships across products is a big focus at UBS. "Increasingly, we're asking client-facing teams to be able to sell and talk to clients knowledgeably across a larger number of products and even global products," he explains. "Having ... such a large trading floor allows for those groups to get to know each other and communicate more freely than if they were on separate floors."
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