Your Guide to the Ultimate Trading Floor
A large trading floor, according to Leibowitz, also allows the support, technology, middle-office and business management people to sit on or close to the floor and be more closely aligned with the trading groups. "They get to know the traders better and can respond more quickly," he relates. "They are more involved in the daily business."
Sterling adds that the proximity between the traders and the technologists is key to UBS' ideal trading environment. "We have developers and product managers that are very hands-on in the building, and the technology and design people are sitting literally 20 feet from the traders," Sterling says. "We put developers very close to the traders and get them talking. The traders are challenged to learn what's happening with the technology, and the technologists are encouraged to get familiar with the trading to make better decisions as they're building a system as opposed to being told what to do without context."
Big City Constraints
But many broker-dealers don't necessarily want to move out of Manhattan to achieve the trading floor design accomplishments of UBS. Rather, some are trying to completely rearchitect within the confines of the city.
Wachovia, for example, moved into its brand-new equities trading floor in New York at the end of 2005. Located in the historic Seagram's Building at 375 Park Ave., the trading floor environment occupies two floors in the building and includes about 400 trading positions. Wachovia had to account for the usual constraints when building in Manhattan, according to Susan Certoma, CIO of Wachovia's corporate and investment banking group, who notes that the project was broken down into three components. The first step, Certoma says, was developing the business perspective and trading strategy -- what is happening in the markets now and where the business will be going in the next three to five years. The second component involved identifying the technology platforms that will enable the trading strategy now and in the future, she adds. Finally, Certoma continues, were the physical space considerations.
According to Certoma, the two-year rollout from inception to go-live date was aggressive by trading floor standards. "The markets are moving toward electronic market making for a lot of the basic securities, and some of our niche plays are around structured products and more-complex products, so there's greater infrastructure needs, such as analytics and modeling," she explains.
Built to meet current needs, the new trading floor, Certoma points out, also accommodates Wachovia's longer-term business vision. The new trading floor environment is more of a client-focused arrangement and what she calls a collaborative, pod environment. "The world is moving toward cross-asset sales and trading, and that comes into how you determine the teams you put together, such as forming small groupings or pods of sales and traders," Certoma says.
"Looking into the future, those business pieces are all about collaboration," Certoma adds. "Traders [are] used to being connected, so we have to create an integrated environment for them."
The integration of phone, E-mail, mobile communication and video aids in a successful trading environment, Certoma continues. "Traders want anytime, anywhere access so they can be in constant contact with clients and get market news and information from the trading floor whether they're there or not," she says.
In terms of the physical space, Certoma points to the usual suspects: arrangement of desks for workflow and to facilitate communication among groups, good light, and managing the noise level. Ultimately, though, she says it's about making sure trading floors are flexible and traders, groups of traders or whole desks can be moved around and configured to best suit the firm's business needs.
"The way we've set up our floors, they are extremely mobile, and we can do intraday moves -- we have mobile workstations and mobile desks with blade technology on the floor," explains Certoma. "As markets move and we look at different ways of servicing clients, we can be dynamically responding those changes on our floors."
How is this achieved? One key element is advanced cabling, according to Certoma. "We're starting to incorporate these advanced cabling options that allow telephones and PCs to run on the same cable, so there's new simplicity in the design and it's easier to move people around," she explains.
Wachovia has extended that flexibility to the technology that drives the trading floors. "We have deep deployment of virtualization and grid technology that we use for heavy computing, such as heavy analytics in the structured products area," Certoma says. "We have grid in a box right now, and we're expanding that capability so it becomes more of a data virtualization environment as well."
Part of the reason behind the move to a grid environment was the limited space available in the building. "From floor to ceiling was only about 10 feet, so we couldn't have PCs under every desk," Certoma relates. "Between the space and the heat we had to think creatively."
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