Chasing innovation on Robeco’s international fairness buying and selling desk: ‘With a purpose to keep good, we have to grow to be higher’

World asset supervisor Robeco leverages a low contact and excessive contact buying and selling crew that spans throughout three continents. And, like most asset managers throughout the road, its international fairness buying and selling desk performs host to a wide range of characters, every bringing their very own particular person string to the broader crew’s bow.

The agency claims to be an early innovator on a number of counts. Particularly, onboarding algo wheels earlier than they turned mainstream and incorporating buying and selling researchers into their buying and selling desk lengthy earlier than many had price range to take action. 

Lars ter Braak, Robbert Wijgerse, Tomaz Mota, Dennis Grashoff, Edwin Scheffers, Bastiaan Berendsen, Martin van der Schans

“Most asset managers do not need the size to rent information scientists specialised in buying and selling analysis. By way of the variety of corporations which have a devoted buying and selling analysis crew, we is likely to be one of many prime gamers,” explains Lars ter Braak, one of many establishment’s two buying and selling researchers primarily based in Rotterdam.

Robeco previously had a central multi-asset buying and selling desk throughout equities, overseas alternate and stuck earnings, headed up by Robbert Wijgerse. Nevertheless, not like the various buy-side desks trying to obtain synergies by merging asset courses, Robeco selected to separate its buying and selling desks by asset class in 2017 within the pursuit of larger effectivity.

The asset supervisor now has its core desks for equities, mounted earnings and overseas alternate in Rotterdam. Making up its international equities refit are two low contact and two excessive contact merchants primarily based within the metropolis, with one other two excessive contact merchants in Hong Kong and two primarily based within the US.

“Ultimately, the effectivity that we hoped to achieve with having one desk was not realised and due to this fact we stated we wish to concentrate on one particular asset class with devoted fairness merchants, mounted earnings merchants and FX merchants,” says head of fairness buying and selling and operational portfolio administration at Robeco, Robbert Wijgerse. “We now have the identical concentrate on the asset class because the underlying portfolio managers have.”

Algo wheels and extra

Robeco claims to be an early innovator with regards to electronification and has a big refit in quant-based and program buying and selling out of its central location in Rotterdam. Among the many improvements the establishment suggests it was fast to undertake is algo wheels, claiming to have used them for money equities since as early as 2016. Making up the agency’s Rotterdam-based low contact duo are senior fairness dealer Bastiaan Berendsen and fairness dealer Tomaz Mota. 

“There was extra demand [on the trading desk] for those who have been sensible with methods, eager to make use of algos, and who even have extra of a research-focused concept of buying and selling and fewer on intestine feeling,” says Berendsen, who joined Robeco in 2006 as an information and software supervisor.

Berendsen not too long ago travelled to Robeco’s Asia places of work to discover launching extra algo wheels for equities within the area. “Greater than 50% of all of our equities orders globally are executed through an algo wheel, and we’re utilizing algo wheels for index futures however just isn’t but on the similar stage of stream.” 

Berendsen’s expertise proved important when Robeco made the choice to implement FlexTrade as its execution administration system, having beforehand used Charles River for each order and execution administration. 

Like Berendsen, Tomaz Mota has had an analogous journey to the buying and selling desk. Till becoming a member of Robeco round two and a half years in the past as a result of a want to really feel extra linked to the motion, he had at all times been in roles regarding buying and selling however by no means within the front-office.

“[As a trader] you’re involved with the decision- making from the portfolio managers and also you get extra of a view of the market as a substitute of simply being within the pipes and fixing how issues settle and the way the transfers are completed,” he says. “Executing the trades is rather more thrilling.”

Among the many tasks the low contact crew is engaged on through its EMS supplier is the merging of orders for index futures, in addition to feeding buying and selling and order data through APIs instantly into the buying and selling system to boost execution.

“We aren’t instantly going to commerce on the sign – there’ll at all times be human oversight not less than within the foreseeable future – however these options can actually result in being among the best buying and selling desks sooner or later,” explains Berendsen. 

“We’re working along with FlexTrade to see how we are able to commerce these [index futures] through algo wheels. We wish our brokers to have the ability to settle for receiving pre-allocations for these orders. If we’re buying and selling for a number of accounts, we have to move on the accounts numbers to them through FIX. That’s one of many huge enhancements of getting FlexTrade – ensuring that we’re not going to cross for accounts that don’t permit crossing for example.”

A lot of the innovation opted for by Robeco’s low contact buying and selling providing is fuelled by its in-house buying and selling analysis crew who work with the buying and selling desk on a project-by-project foundation – aimed toward enhancing the way in which the crew executes to minimise prices and scale back market impression. The asset supervisor first integrated buying and selling researchers into its workflow in 2016 – considerably sooner than many corporations throughout the road. That is one thing that Berendsen says has had tangible outcomes on the way in which the establishment executes, particularly round its stage of passive buying and selling.

“We’ve got massive quant methods in developed and rising markets,” he explains. “For buying and selling many various shares, it is sensible to commerce comparatively passively. Typically, the quant methods don’t anticipate to have numerous short-term alpha, so you then don’t must be buying and selling extraordinarily aggressively out there.”

Analysis is rocket gas 

The crew’s buying and selling researchers are Robeco’s not-so-secret sauce. Additionally primarily based in Rotterdam with the low contact crew are Lars ter Braak and Martin van der Schans, making up Robeco’s complete international buying and selling analysis refit. The pair sit on the desk with the execution crew and have common updates with the buying and selling desk. In keeping with Van der Schans, having a buying and selling analysis providing is crucial for assessing the broader image of the markets, permitting the merchants to focus their consideration on what’s going down on their blotters day-to-day. 

“The world of the merchants is [centralised around] the trades they’ve to complete on a selected day,” he says. “For analysis, you want a bit extra focus and far from what’s occurring. The skillset is totally different. Merchants are rather more sensible quick choice makers and they’re fast on their ft. As a researcher, you will have extra time to dive into particulars, take into consideration issues, and construct issues from the bottom up.”

The pair’s major focus is analysing the agency’s interplay with the market and the impression they’re having with it through how the buying and selling crew is taking positions. As a long-term investor, the establishment is eager to keep away from influencing costs out there. 

“We began out with evaluating execution algorithms and dealer behaviour however now we’re on the level the place we began analysis on offering real-time suggestions to merchants,” says Ter Braak who joined Robeco in 2021. “Order allocation is an fascinating problem. Initially, you have to guarantee that you’re evaluating apples to apples, which we do via randomised managed trials. Second, you must allocate most orders to one of the best performing brokers, whereas others ought to obtain adequate orders to find out which dealer performs finest within the subsequent interval.”

Jules Boletis

Central to a lot of the crew’s work of late has been a concentrate on enhancing its use of real-time information to enhance execution and support the excessive contact decision-making processes. The motive force behind it – utilizing the info to evaluate whether or not different behaviours may have lowered the agency’s prices via again testing.

“Over time, we now have saved information centrally in a database and we now have continued so as to add rigorously chosen datasets to boost our decision-making course of,” explains head of the equities buying and selling desk, Wijgerse. “Going ahead with the usage of new applied sciences, we’d like to help merchants with their selections throughout buying and selling as a substitute of post-trade like typical TCA [transaction cost analysis]. Initially TCA is extra backward wanting and we wish to be ahead wanting.”

Buying and selling analysis at Robeco for the previous couple of years has been centered on robotically routed stream that goes to dealer algorithms – importantly specializing in this choice course of and its dealer rating capabilities. Now, each Ter Braak and Van der Schans are wanting in the direction of the agency’s international excessive contact merchants.

“Our excessive contact merchants sometimes execute bigger trades that may probably have numerous market impression,” says Van der Schans. “They’re making an attempt to establish when to hurry up or when to decelerate within the execution. If the commerce is massive, it’s not at all times straightforward to seek out the liquidity. They’ve to find out when the worth is nice and after they wish to do extra.”

World excessive contact

Robeco has two equities excessive contact merchants in every area it operates in – two in Rotterdam, two in Hong Kong and two within the US – permitting it to supply an across the clock buying and selling mannequin. 

Jayson Suen

Representing the agency’s European equities excessive contact refit are senior fairness merchants Edwin Scheffers and Dennis Grashoff – two of the longest standing members of employees in Robeco’s equities buying and selling crew, with 15 and 34 years below their belts, respectively. Each are first hand witnesses to the speedy evolution of digital buying and selling. 

“For those who don’t have any luck, you gained’t make it on this trade, however it’s good to have an excellent community and be linked with numerous brokers. Previously you’d choose up the cellphone. Lately numerous issues are going by IB chat to deal,” says Grashoff. “The one unhappy factor about that’s you don’t hear the stress in any person or the room on the opposite facet. If one thing is going on you hear that within the background. On the chat you don’t see that.”

Scheffers confirms the crew has IB chat scraping instruments with automated notifications to verify the pair are capable of capitalise on potential pure liquidity alternatives. If pure can’t be discovered, the pair favour a darkish solely liquidity algorithm to kick off an order in a approach that gained’t create an excessive amount of market impression. For Scheffers, a love of the markets has stored him tied to the desk and dedicated to staying in a excessive contact function all through his profession.

“I rarely go away the desk throughout market hours. I carry my sandwiches from house and I like to look at the market [throughout] the entire day and don’t wish to miss any alternatives throughout lunchtime,” he says. 

“I began my profession on the sell-side. At the moment, I’d keep behind my screens all day. For those who would say {that a} colleague dealer was out for lunch or one thing, they [clients] would instantly withdraw their orders. You needed to keep on the desk, see every part, and get in touch with them instantly on each market-move.”

Representing Robeco in Hong Kong are dealer Jayson Suen and head of Robeco’s Asia Pacific buying and selling desk, Valéry Derbaudrenghien, who joined Robeco two and three years in the past respectively, each from earlier buy-side roles. The pair cowl a 12-hour buying and selling day kicking off with Australia and New Zealand at round 6:30 am native time. And, on condition that they’re simply two on the desk, the pair have derived an early and late shift system to handle the day. 

“The majority of what we commerce comes in a single day and shall be quant orders,” explains Derbaudrenghien. “That retains us busy proper from the morning.”

Robeco has an equities providing in Asia however has additionally not too long ago launched a set earnings fund from Singapore because of elevated demand within the area. The fund started buying and selling in the beginning of final 12 months. The agency trades half of its Asian equities stream electronically and half with money, Derbaudrenghien confirms, including that the way in which the agency’s Asian buying and selling providing is ready up makes it distinctive compared with its native friends.

“A part of the Asian trades will nonetheless be traded from Rotterdam as a result of we now have massive quant applications and money should be managed between areas. Subsequently, every part that’s very liquid shall be traded in a single day via applications by our Rotterdam colleagues with oversight from the Hong Kong desk,” says Derbaudrenghien.

Given the market construction nuances of Asia, Suen stresses the significance of the excessive contact merchants on the bottom within the area to seek out pure liquidity. Asian markets have fragmented and regionalised regulatory and market buildings to stick to, he explains, with various ranges of urge for food for darkish buying and selling. That is one thing the Hong Kong primarily based pair should handle.

“The Asia area could be very totally different in comparison with Europe and the US as a result of the liquidity right here could be very gentle. It was worse throughout Covid as a result of there was no quantity,” says Suen. “We base numerous algos on the machines, however then on the similar time, we commerce lots within the crossing platforms and at midnight venues.” 

“At occasions, you possibly can cross in opposition to a VWAP order 100 shares at a time with out issues and it’ll full half of your order at midnight,” provides Derbaudrenghien. “Managing the darkish is essential for Australia, Hong Kong and Japan. General, we cross numerous blocks in these markets and in ASEAN markets as nicely, or in New Zealand early within the morning.”

Throughout the Pacific sits Robeco’s US-based excessive contact buying and selling crew. As a European asset supervisor with a buying and selling desk primarily based within the US and a worldwide outsourced middle-office supplier, Robeco has discovered itself higher outfitted than others to climate the fallout attributable to the market’s shift to T+1 settlement within the US.

“Nevertheless, that [the T+1 shift] has positively had an impression on portfolio implementation and operations and never simply the buying and selling desk,” says Wijgerse.

Tamara Botteldooren

Sitting within the US are dealer Jules Boletis and senior dealer Tamara Botteldooren, each of whom have been drawn to the area by a love of the markets and of residing overseas. After three months on an alternate programme to Boston with Robeco, Botteldooren requested to maneuver to the US completely. Initially becoming a member of Robeco in 2004, she is now in her second decade on the asset supervisor. 

“The agency I left to hitch Robeco was nonetheless utilizing spreadsheets to ship orders,” she explains. “I joined Robeco as they have been already approach forward of everybody else technology-wise again in 2004. In the present day we’re nonetheless one of many leaders.”

Working alongside her is Jules Boletis who has been with Robeco for 5 years and has spent the final two of these in New York. The US desk doesn’t have native portfolio managers. As an alternative, Botteldooren and Boletis signify and execute on behalf of the Rotterdam and Hong Kong primarily based equities portfolio managers. 

“Our worth add is in market insights, data of buying and selling technique and the implementation thereof. One of many sources I’m utilizing increasingly for information and data is social media. Primarily Twitter [X],” explains Boletis. “Having a social media feed, it appears like you might be in a multi-asset dealing room even if you’re in a small crew in New York since you obtain a lot data. It’s stock-specific [insights] but additionally market broad as a result of totally different belongings all correlate. It’s necessary to be within the loop of all these market actions.”

Every member of the worldwide Robeco equities crew brings a person skillset to the buying and selling desk. As an innovator from early on, the long-only asset supervisor’s arrange has left it agile within the wake of main market shifts going down globally lately – not least the seismic shift to T+1 that has left many others floundering. And it is a technique it intends to hold via to the long run, no matter that will carry.

“If we do the identical factor again and again, we keep the identical,” concludes Wijgerse. “With a purpose to keep good, we have to grow to be higher.”