British traders aren't mediocre. We simply understand the game
Are Britons embarrassingly average bankers? To all those who suggest my countrymen and I are somehow lacking, I'd like to quote Michael Lewis, the storied American author. When he arrived at Salomon Brothers' London office in December 1985, Lewis noted that the Brits were different. "There is a genus of European, species English, to whom slick financial practice comes naturally,” he observed. Distinct from their American counterparts, Lewis found that the British “were less interested in the latest financial gadget … than in establishing relationships with customers.” These observations are now more than three decades old, but they continue to hold true.
A few weeks ago, a broker writing on this site under the pseudonym “Lucien Bazelgette” took swing at British traders for being “the rudest in the market.” Bazelgette labelled us “conceited,” and accused us of consistently hiring “mediocrities” over “exceptional candidates,” suggesting that we prefer applicants with “a mate on the buy-side.”
I could not disagree more. Having worked as a trader in both large investment banks and in buy-side boutiques (both in London and in mainland Europe), my experience has been that the British approach is courteous, effective, and – above all – sincere. It seems to me that Lucien is taking his experiences out of context.
One of his complaints was that British traders make brokers feel as though they are asking for a favour whenever a broker calls. While I always make a point of remaining professional and polite over the phone, the point nonetheless stands that brokers are indeed tacitly asking for a favour. As a result of the increasing penetration of technology into trade pricing and execution, the traditional role of brokers – that is, to provide liquidity – is progressively being made redundant. Information is now the predominant currency of brokers: it’s how they justify their services and, crucially, their commission. When, then, a broker calls and I share my trade ideas, I am giving them something for free. After all, they can use this intel to inform their own opinions and advise other clients. In return, I expect kick-backs: preferential treatment, more in-depth colour, first right of refusal.
Like it or not, the process is a series of transactions and – as a trader – I am paid to eek every ounce of value from any given transaction.
This fact – coupled with the reality that my trade may well be time sensitive (think FX spot markets) – means that unfortunately I do not always have the luxury to chit-chat when submitting an order. Some brokers understand this, some do not; it is nothing personal, simply the nature of that given market. Indeed, I find it is more often the non-Brits that flaunt this fact and turn it into a privilege in their supposedly “superior” station as trader. One Dutch trader I used to work with used to reply to the innocent question of, “How was your weekend?” with an abrupt, “None of your business.” This was not because he was short of time (he traded a relatively slow asset class), but because he enjoyed seeing the broker squirm.
As for Britons’ alleged penchant for hiring so-called “mediocre” people, plus Lucien's suggestion that British traders spend too much time socializing and drinking after work, I would argue that neither are justified. Firms in Britain, I find, tend to hire according to a wider set of criteria than just technical knowledge: sometimes they will opt for harder-to-teach soft skills. Secondly, I should damn-well hope a broker puts in the graft to socialise with me outside of office hours. At the end of the day, I want to deal with people I like and whose company I enjoy. Sure, they may not be the best in their specific business, however if I believe they have my best interests at heart, I am far more likely to feel comfortable dealing with that person and so do more business with them.
Ultimately, it seems to me that Lucien wants to deal in a very specific way. This is fine, providing he has the client base to support his selectiveness. My main concern is that he has little interest in developing genuine relationships with his clients, which may well come back to bite him. Personally, I prefer trading with brokers that take the time to get to know me and understand my motivations. After all, I try to do the same with clients of my own. Broking for a Brit may not always be easy, but we value loyalty, and that engenders a broker-trader relationship with longevity. Maybe this is why the City of London has, for so long, been a success?
James Taylor is the pseudonym of a senior trader in London.
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