Trading – Back and Front

As heads begin to roll at Barclays, I’m reminded of my time around and on a Trading Floor – in my case it was energy that was being traded.  My first contact with traders came when I ran a team in Back Office.  Back Office was responsible for checking and confirming trades, for ensuring that the terms and conditions were adhered to, and for authorising payments and checking that received monies were correct.  Traders do occasionally make mistakes and Back Office is there to pick these up and to inform the trader so they can be corrected.  Most of our traders took this part of the process in their stride, but there were some for whom it was personal affront to be challenged.  And they could react very very badly indeed.  There was quite a high level of robustness expected of people operating on the trading floor.  It was probably a good grounding for stand up comedy.  All the heckling.  But people reacting badly could be hugely intimidating.  I used to try to make sure it was me who went to see one or two people when they made mistakes, rather than my staff.  And after some nose to nose stand up rows, with no comedy value at all, they got the message.  But these people were paid a lot more than me, and perhaps three times what some of my staff earned.  If success and power comes from wealth, there was a massive imbalance between the traders and those policing them.

I saw the process from the other side when I changed to work on the trading floor itself.  The kind of trading I did was highly specialised, with physical power deliveries, and no screens, just very long specific, technical contracts.  Now I was the one trying to put together the deals, trying to develop the best terms and conditions, trying to make a contract that was profitable to the company, but not so profitable that our counterparty would never do business with us again.  Back Office were policing my work, and bless their cotton socks, they saved my bacon a couple of times by spotting mistakes in time for them to be corrected.  Yes, it was frustrating to have to redo work.  But I’d been on the other side of the fence, and I knew it’s better to get things right.

I must stress again, this wasn’t in the banking sector.  But having seen traders move between industry sectors, I reckon that our trading floor was like a peaceful park compared with the financial sector.

As those heads roll, I hope that the ones who were bullied and shouted at and intimidated into putting numbers into systems are not the ones at risk of being jobless.

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4 responses to “Trading – Back and Front

  1. This is why, if I may say so, it is no bad thing to appoint people to the priesthood who have experience of life in a completely different field. We can now benefit from your understanding of life!
    But I also found the 'slice of life' picture you give here quite fascinating…thank-you!

  2. Thanks Lay Anglicana!
    I was on a placement in 2008 and listened to a tirade against Traders being delivered from the pulpit – still wish I'd walked out. Traders are like anyone else – they respond to incentives. And the vast majority are lively lovely vocal interesting people.

  3. I've been on a few trading floors myself – as someone selling and training users of derivatives pricing software. Most traders I dealt with were trying hard to do a decent job, though some were very worryingly inclined to gamble on anything and everything. This was over 15 years ago, and I can see that pressure to 'perform' has increased markedly since then, which would be a big problem for the ones already inclined to push boundaries.

  4. Thank you for your comment quotidiancleric, your experience of traders sounds similar to mine (yes, they will bet on absolutely anything). And there are always some who are willing to push boundaries – just as in any walk of life. In our line, they might be called prophetic (or not!).

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