Tom Cunnane got his start as an equity trader 15 years ago, before the global financial crisis. The technology underpinning world markets back then was a lot simpler. The order management system at his first bank was, as he put it, little more than “two ice cream boxes and a bunch of alphabetical dividers”. After trading stints at CIBC and Curzon Securities, Tom moved into the fin tech space with companies such as Eze Software and Enfusion. Now with Cowen, he gets to bring both worlds together. As one of the veteran dealers for Cowen’s outsourced trading desk service, Tom handles all manner of trades, while adding value through his nuts-and-bolts knowledge of leading-edge trading systems.
Q: Let’s begin with some of your history. You started as a trader, then went into tech, and now you’re trading again. You have an interesting mix of experience.
A: I’ve worn multiple hats within the industry. I’ve been a client. I’ve been on the sell side. I’ve also worked in the tech space. So, I think I’ve got a pretty good perspective on the industry, having worn all those hats. When I started at CIBC, it was the back end of the big bull market, before everything went wrong with Lehman. I started on the equity trading desk and learnt the ropes from some grizzled market veterans who were completely non-tech savvy.
For a smaller player like CIBC, we didn’t have a lot of advanced technology. The first order management system we had on the desk was literally two ice cream boxes and a bunch of alphabetical dividers. One for filled orders and one for working orders. It’s extraordinary to think back to that, but it worked. One of my colleagues just had that institutional memory. You could have asked him about any client, any order, any position, and he just knew it. Over the years, people have obviously come to rely on technology more and more.
I moved from CIBC with the desk to Curzon Securities, which was an independent agency broker. They’d hired some tremendously talented technologists, so it was really going from one extreme to the other, from having almost nothing technologically, to being in the company of some really, really smart guys. That’s where my interest in the technology side really started to grow. Some of the people I was working with there were really at the cutting edge of algorithmic market making and ran a high frequency book. Working closely with those guys was invaluable for me.
Q: What attracted you to Cowen?
A: I’d seen the Cowen business really grow over here in Europe. I’d seen how quickly Cowen was scaling, and the talent that Cowen has brought on from other places. It was a fantastic opportunity from that point of view. You don’t often find exactly the job you know you want to do.
I knew it was it was going to be a good fit. Coming into the business, you know your own strengths. Then I was able to work with so many other experienced traders and learn that much more.
Q: Now that you’re back on a trading desk, how does that tech knowledge come into play?
A: We have clients using the well-known platforms that are out there. We have a lot of customers who use Eze. We’re seeing a lot of customers taking on Enfusion. Having worked in both of those places and having a knowledge of how those systems work, being able to visualise what the client is seeing on the desktop, is very helpful. You know, 99% of the time, orders flow straight through and there are no issues. But whenever an issue crops up, knowing what the client is seeing and being able to walk them through any issues without going to the vendor is quite valuable to the trading desk, because the clients really lean on us as the first line of support.
Q: How does that translate into value-add for clients?
A: It’s mainly in terms of time and efficiency. If a trader needs to get an order to market and it’s not routing, we’re going to be the first port of call. If a client is trying to execute through us and something’s not working, they’re immediately on to us to find out why. Having a knowledge of how those systems work and being able to resolve issues on the fly, from an efficiency point of view, is massive. You save them having to go to the vendor to find out the problem. By the time they’ve done that and come back, the opportunity could be missed.
Q: Does Cowen do anything differently with regards to the combination of trading and technology?
A: From what I’ve experienced previously, the line between the trading desk and the technology team is more blurred here. We really operate as one team. I think we provide a great deal of value to clients that maybe you wouldn’t get at other places, just because of the expertise we have.
We work with a whole range of clients, from very, very small to enormous institutions. One of the differentiators for Cowen is how much effort and energy we put into understanding a client’s set-up, and also helping them set it up. If you’re a $20 billion fund, you’ve probably got your own tech team specifically looking at just your tech stack and how to implement it. But for a lot of the smaller funds, and a lot of the start-ups, if you haven’t got a trader, you probably haven’t got a tech team as well. So, a lot of the value we provide is in helping clients build that tech set-up to achieve exactly what they want, and then implementing it.
Q: What would you say are the particular challenges that funds face when it comes to extracting value from technology in today’s marketplace?
A: Through the 2000s and into the early teens, we saw an explosion in the number of fin techs starting up, all serving a particular niche. At a lot of places, you had a lot of different systems being stitched together. What we’ve seen in the industry the last couple of years is consolidation. The technology has moved on and you don’t have to rely on stitching together batch processes or file transfer processes anymore. People are much more comfortable with APIs, which are much more prevalent.
But I think there’s probably been a shift in what people are demanding. People now realise that there are true front-to-back systems as a possibility. Some of the larger tech firms that have taken over some of the smaller ones are now really working out how to put together all those pieces efficiently, via APIs rather than file transfer, to create one true platform that can serve all needs, rather than disparate systems stitched together.
Q: In other words, this is about more than just execution?
A: When people think of trading technology, your mind instantly goes to the execution management system and routing orders to market. The ability we have at Cowen is offering straight through processing, through the middle and back office. Being able to offer all of those parts efficiently within one tech stack is a game changer for clients.
The last couple of years, people have seen the value in outsourcing post-trade operations and post-trade services which previously, the smaller funds wouldn’t have been able to afford. With a firm like Cowen, we can offer a lot of that on the client’s behalf.
Q: Last question. We live in unusual times. Are there any critical factors in current market conditions that underline the value of an outsourced trading desk?
A: Today’s markets are extraordinary. We see shifts in sentiment in miniscule timeframes. The market can be reacting to one factor, like inflation, and then, obviously, with Omicron it was a complete shift in the news that people were following. Events like that don’t respect any kind of time zone. So, having a global team and being able to hand over the portfolio in a follow-the-sun model is massive.
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