Morning Coffee: Goldman Sachs on the future of trading, UBS on the future of research. PE associate messes up on Twitter
Goldman Sachs is moving into electronic corporate bond trading once again. Despite quietly shelving its previous attempt, GSessions, in 2014 – something its creator said is reflective of big banks’ tendency to stifle innovation – Goldman has started allowing investors access to the $8.4trn corporate bond market for a second time.
GSA, as its now known, was rolled out to Bloomberg last month, drawing attention to the new platform that had so far remained largely out of sight for about a year. So far, it allows access only to ‘oddlets’, or trades worth less than $1m, but also offers $75-100m of bonds to trade every day, says the FT.
The corporate bond market has long been the last bastion of human traders, simply because the market has been considered too large, too full of documentation and too complex to leave to computers. Goldman is looking to change that – slowly.
“My guess is that they’re [Goldman] trying to perfect the algorithm,” said Matt Brill, a senior portfolio manager at Invesco.
If Goldman is making moves on the trading floor, UBS is looking to shake up research. By 2018, investment banks will no longer be able to ‘bundle’ research costs in with other trading fees – under MiFID II – so most firms have been shaking up their teams by hiring in a combination of senior, highly-rated analysts and juniors to support them.
UBS, however, wants to change the content of its research reports by employing data scientists, pricing experts and psychologists. Most firms making a commitment to research talk of the desire among investors for ‘meaty’ research, but Juan-Luis Perez, hired from Morgan Stanley in 2013 to lead UBS’s well-regarded research team, wants to change the format.
“If you are using the word risky all the time, you can never learn because the interpretation of risk is so broad that you can always take the victory lap,” he said on why UBS has been bringing in psychologists.
“It’s not just to avoid the word risky,” he added. “[It is] to try to break down the big questions, like ‘what is the future of the bank into testable propositions’ that can have an incontrovertible answer.”
It’s also going to solicit questions directly from clients, and then use a crack team of very niche specialists including data scientists and geospatial analysts to answer them.
Separately, a Blackstone associate called Max Salk is embroiled in a very public spat with Daily News journalist Shaun King. King claims that he received death threats from Salk in response to his column on refusing to standing for the Star Spangled Banner, reports Dealbreaker.
Salk has supposedly been removing all evidence of his existence on social media, but King has been taking screen-shots of his Linked profile, calling for a response from Blackstone on Twitter and publishing some fairly meek apologies from Salk claiming the whole thing had “nothing to do with my employment”. Blackstone has reportedly yet to respond.
The exodus to boutiques continues. David Azema, who was chairman of global infrastructure at BAML in London is joining Perella Weinberg to lead its investment bank in Paris (Financial Times)
Credit Suisse’s chairman Urs Rohner is “convinced” the bank’s news strategy will lead to a rival (Reuters)
Another Angela Merkel ally says single market access will be hard. “If someone wants to benefit from the European Union single-market structures, he also has to contribute to the cost of that operation. In Britain, before the referendum, nobody talked about that fact.” (Bloomberg)
Aviva has hired J.P. Morgan’s head of FIG for South East Asia, Chetan Singh, to lead its M&A team globally (Bloomberg)
Meet In-Q-Tel, the venture capital firm largely funded by the CIA (WSJ)
Former Rothschild investment banker, France’s economy minister and former Francois Hollande ally, Emmanuel Macron, is making his own Presidential bid (Financial Times)
“If you go outside the top 20 super-managers, you find that hedge funds underperform in the S&P 500, index funds with a diversified mix of companies, balanced mutual funds, and, according to a Cambridge University study, a collection of stocks picked at random by monkeys.” (American Prospect)
The odds of Britain still being an EU member by 2020 are 6/4 (Financial News)
London bankers, move to Warsaw (Financial Times)
If you’re sick, stay at home: "Some people want to appear tough and signal that they are hard-working. You have over-the-counter drugs that suppress your symptoms, but they don't suppress contagiousness.” (Bloomberg)