FRONT MATTER | PRIMER ON EXAMPLE KNOWLEDGE WORK DOMAINS
WORKING THROUGH SCREENS 22
Financial Trading exchanges have created opportunities for trading automation based on predefined, quantitative rules set within and executed by computing tools. In situations where this sort of automation is used extensively, actual conversations outside of one’s own firm may occur only in special cases, such as negotiations over large deals, or as an intentional means of building specific business relationships through personal connection.
The many specializations of financial trading are, generally speaking, about the exchange of financial instruments to maximize returns for traders, their firms, and their clients. The teams that accomplish these goals are composed of distinct roles and established hierarchical structures that help ensure strict accountability. One important distinction in financial firms’ personnel is the pervasive separation between trading and “back office” groups. While traders make decisions about actions in their markets, the back office completes the detailed work that makes deals happen, such as billing, accounting, and any reconciliation of specifics that might be needed.
Specialized Trading | Application Concept
Real time market information feeds, as well as a wealth of online research functionality, have created the potential for information overload and excessive cognitive burdens in traders’ work. Successful traders, having adapted to this potentially overwhelming context, become skilled at knowing when to invest time to research a transaction and when it is more beneficial to simply execute a deal based on immediately available information. These choices of time and attention are made, in part, based on the input and visible activities of other traders. Onscreen tools for supporting collaboration are often supplemented with shouts to colleagues across the room or via a global “squawk box” intercom system. While the use of computing is universal in modern financial organizations, individual firms have varying attitudes about providing new technologies to their workforces. Some firms conduct updates to their computing infrastructure in long, safe cycles, while others are continually attempting to improve the productivity of their staff by providing them industry leading applications.
The history of financial trading has strong ties to advanced applications of communication technologies. Traders are communicative people, and ongoing relationships based on stable interchanges have traditionally been a necessity in order to secure favorable transactions in markets over time. The desire for the most current market information possible has driven successive generations of traders to rapidly adopt new technologies. For example, one of the first applications of the telegraph was the transmission of market data, and in a similar vein, many financial organizations were relatively early adopters of communication via computer networks. Computing automation and interactive applications have had profound impacts on professional practice in financial trading. Although contemporary traders may still be vocal participants in their markets, at the time of writing, many types of trading transactions are typically accomplished without any face to face or phone conversation. Instead of verbal interaction, communication in these specialties now commonly involves the exchange of textual information on computer screens. These networked
Specialized Market Analysis | Application Concept
The main drivers for adopting new technologies into trading activities have been promised increases in efficiency and volume, reductions in errors, warehousing of useful data, and freeing workers from menial actions so that they can spend more time conducting “smarter” business. Financial firms often develop their own specialized computing tools internally, and when they purchase applications from niche product vendors, they may substantially customize them during their system integration processes. Outside of domain specific products, both traders and back office workers make extensive use of typical, off the shelf productivity applications and communications technologies.
The fictional financial trader in this book’s examples works in the flagship building of a leading global financial firm. His company is known for making significant investments in computing infrastructure for its highly sought after staff. He has been in financial services for a few years, but is still at a point in his career where he wants to stay focused on day to day trading. He is motivated by monetary rewards, but he also enjoys the responsibility, risk taking, rapid decision making, and intensive, moment to moment focus of market transactions. He is a highly social person, and is known by coworkers and other traders as a wit and conversationalist. His workplace goals include: Work fast and smart, making decisions quickly Exceed, or at least meet, financial targets Maintain business relationships and have good conversations Be honest and fair with counterparties while advancing organizational goals Keep current on relevant market news and trends
Published on Jan 13, 2010
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