As trading becomes increasingly electronic, exchanges merge, competition on the floor increases, and layoff threats increase - what's a trader to do?
Survival Tip #1: Take Lemons, Make Lemonade.
Traders need to be a resourceful bunch, says Scott Saunders, managing member at FM Brokerage, a specialist firm in ETF executions. "I think you have to spin the upheavals or changes going on and see them for any opportunities that may exist," he says. That means looking for new products and being proactive. "You can't wait to see what changes will come. You have to be actively seeking out change that will be productive for your bottom line."
Tip #2: Don't Worry. Really.
It may sound counterintuitive, but Saunders advises those on the trading floor not to fret. "You have to realize that you can't control every facet of the business. If you try, you will only end up stressed out and unproductive," he says. "You can, however, position your business to be ready for those changes that come, so you can quickly adapt and take advantage of those situations that your competitors lag behind in."
Of course, what the future holds for trading floors is tough to discern right now. "With the deal with the NYSE and AMEX just being announced, a lot of the details are not clear," Saunders admits. "There are pros to being a floor-based operation, such as being able to see the certain order flow in products and capturing liquidity pools that aren't always visible on electronic exchanges. It is hard to put a time frame on (the impact on) floor operations with certain details still being discussed."
Tip #3: Get Off the Floor.
You can capitalize on specialties to get out of trading. Richelle Konian, chief executive and co-founder of Careers On The Move, an executive recruiter based in New York City, has placed a number of traders looking for opportunities related to - but not directly in - the financial services space. "With their knowledge, understanding trades and having a specialty in derivatives, they can go to the software-vendor side and serve as an advisor.... Those familiar with fixed-income products, for instance, could be on the options or derivatives side, and they understand the algorithms and the financial modeling, acting as a great resource on the vendor side."
For now and for some time to come, risk management software needs will remain high for most firms, particularly on the credit derivatives side of the business.