Mizuho is making a new push into electronic trading

Mizuho has been aggressively growing the U.S. operations of its relatively small investment bank by hiring in IBD and for its markets business since last year. It realized that it was behind the eight ball in both program trading and electronic trading, so the bank brought in senior specialists in those areas from other larger banks – and has been hiring to build out the teams reporting to each.

Since launching the program trading and electronic trading groups in September to complement the equity offerings of its securities division, Mizuho Americas has continued to hire in the U.S. with an emphasis on hybrid candidates combining client-facing sales-trading skills with knowledge of quantitative trading algorithms. The Japanese bank has also been adding headcount to its equity research analyst team, high-touch trading desk and domestic and international sales trading teams in the U.S.

In addition, Arunesh Hari, the former head of U.S. equity and corporate derivatives at Citigroup and Morgan Stanley, joined Mizuho to lead its new corporate derivatives desk with responsibility for capital raising and financing.

Mizuho appointed former Barclays and Nomura executive director George Nikitiadis as managing director and the head of program trading and former Credit Suisse and Goldman Sachs vice president Lindsey Burik as executive director and the head of electronic trading in May. Both are based in New York.

“For Mizuho Electronic Trading, we decided to consolidate the types of algorithms that clients use – rather than give them 20 different algos, give them a core and we can offer customization in a real-time manner,” Burik says.

“We can have an intelligent conversation about the algo, how it’s performing and what it’s doing, and if we want to make a change I can do it overnight and it will roll out the next day, whereas previously it would take weeks or even months to roll out new algos,” she says.

To form those new groups, Mizuho reassigned personnel with experience working with hedge funds and asset managers from other areas of the bank and made external hires, including candidates with experience using FIX Protocol, ATDL, C#, C++, Java, Python and XML.

“The talent is a mix of high-touch, program trading professionals and algorithm developers, technologists and more from the algo side,” Burik says. “We’re taking a hybrid approach to algorithmic trading, hiring people who really understand the bones and infrastructure of algos, but who can also communicate those concepts to clients.

“It’s usually three separate roles, but we’re looking to add more staff that merge those skills and have a strong tech background with an understanding of TCA [transaction cost analysis] and the ability to translate that knowledge to clients in a face-to-face, consultative role,” she says. “We’re hiring candidates who understand the needs of a trader and the microstructure that is required by algorithms.

“The role of the electronic trader is changing, so we’re making sure that we’re addressing the needs of our clients.”

Employees on the coverage side and on tech side need a broader skill set, as the roles are somewhat overlapping.

“Because of our ability to make changes a lot faster than competitors, we need people with a robust understanding of how that works on the front lines,” Burik says. “We don’t want the model of bringing in a quant and then bring in a developer and then have them make those changes – we want to make those changes on the desk to increase the speed and accuracy of providing an algorithm to a client.

“A lot of firms have talked about having a hybrid approach between high touch and low touch, but we’re making sure that a traditional cash trader has an incentive to be the execution consultant for the client,” she says. “We work closely with them and get involved on the algorithmic side – we want our cash traders to face off with the clients and understand what their clients’ needs are and how they trade, so they are effectively the electronic trading coverage person if the client wants that model.

“We want a holistic approach to execution, and we’ve formulated a structure to do so – we assist from a net coverage perspective, but essentially it’s the sales-trader that’s facing the client.”

As clients have a growing need to source unique liquidity, the bank wants to have the flexibility to offer one point of contact and consolidate those coverage execution points.

“We’re doing training sessions with the sales-traders – it’s a good skill set for them to have to get more into the microstructure,” Burik says. “We’d love it if they can get into the details about this algo executed on this particular platform at this specific time, and instead of a spreadsheet of TCA, be able to use a more interactive TCA calculator that they can do online, create a bubble chart and access different metrics that clients want to see.

“We’re definitely looking for and talking to people who have a hybrid approach, people who have a skill set of creating efficiencies, taking processes that are manual and creating a workflow for alerts or spreadsheets, sales-traders who understand technology and can bring the two aspects together,” she says.

“It helps sales-traders to become better at what they do and take on more of a hybrid role combining sales, trading, tech and algo – people with such a skill set who understand clients’ workflow and can offer customization around an algo in a quick and efficient way have moved into such a hybrid sales-trading role.”

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