Elizabeth Martin is betting on engineers to automate trading but not necessarily to make things faster.
Goldman Sachs Group Inc.’s global co-head of futures and equities electronic trading says that the ‘Flash Boys’ era of the past decade has ceded some ground to customizing trading for clients.
“I’ve never in my career bet against innovation or smart people being able to make things faster,” she says. “There will be some amount of improvement in speed and latency but in terms of the differentiated drivers of what a broad base of clients need in order to deliver execution for them, it’s less important, because most of the big scale providers offer those services.”
Martin, a 20-year Goldman veteran, relocated to London three years ago and oversees the Wall Street bank’s electronic stock trading business. Martin spoke with Bloomberg about the pandemic, the future of finance and zipping around the city in her sports car. Her comments have been edited and condensed.
How did electronic trading perform during the pandemic?
We had days in March where globally markets were turning over close to $1 trillion per day. And doing so pretty seamlessly. In the U.S. in particular, circuit breakers were triggered multiple times throughout March and helped to stabilize the equity markets.
If we have more electronic trading in future it shows that even in times of very high volatility the market can safely handle that.
Will markets get faster?
Over the past 10 years it’s been about speed and scale to some degree. Now it’s much more about reach, stability and customization. Technology is a hugely important part of what we do. If you think about the next leg of electronic trading, it’s about finding different ways to automate workflows.
To the brokers of the future a lot of the value for clients comes from being able to integrate across all points of the trading life-cycle from the blotter to parent orders to child orders.
And machine learning?
We are using machine learning to analyze all possible data that’s available to characterize stock behavior, like every quote and every trade to classify stocks into various clusters.
We look at six to seven different sets of stock attributes and group them based on ease versus difficulty to trade in order to optimize execution. We do this across more than 40,000 different stocks every day.
How have trading floors changed?
Going back 20 years we used to have hundreds and hundreds of traders manually trading stocks by voice. Over time that has moved to far more engineers. If you looked at our equities trading floor early this year, you had a very integrated experience to deliver trading services. Clients want it to be seamless from onboarding to order entry to execution.
In electronic equities trading we are five-to-one engineers to salespeople. That whole group is really present on the floor to solve problems for our clients on a daily basis. Our new London building that opened last year really let us put that vision into practice.
Its trading floor has our operation teams, technology and engineering teams surrounded by the core of our trading business.
What about in the work-from-home era?
We’ve been able to recreate the same sort of virtual community that we had on the floor. On a client call when I look at the nine boxes on Zoom there’s likely to be a few client facing people, a few people from operations and people from engineering teams.
We have engineers that are focusing on everything from quant modeling to how we build our algos and trading systems to how we access markets electronically and book and settle trades.
Where are your engineering hubs in Europe?
Stockholm will increasingly be part of our engineering footprint across Europe. We moved into a new office there two years ago and in a post-Brexit environment we are closer to our clients. Warsaw is our other main hub.
We’ll certainly be growing our presence in Warsaw and Stockholm as we try to attract the best engineering talent.
What does finance look like in the future?
What we’re seeing is more vertical integration of services whether it be market makers getting closer to clients through broker-dealer activities or exchanges increasingly getting into data services and analytics or Regtech.
It’s a very regulated industry. Personally, I think regulators will continue to have a strong view on how we use certain leading edge technologies. I cannot imagine having a conversation with regulators and telling them that robots were deciding how to access the end market. That fundamentally breaks the supervisory responsibilities around market access.
Will the industry be more gender balanced in the future?
We have hired into roles in trading that are historically dominated by men. More than half of campus hiring into those trickier jobs have been with women this year.
In the engineering space where we compete for talent with some of the big tech firms, being able to provide a much more flexible working environment through the pandemic is accretive to the overall quality of the job.
How did you advance?
Particularly in the earlier parts of my career I didn’t have as many senior role models who were women or mothers, which is important to me because I have three kids. But I definitely sought out a broad group of sponsors and many of them were men.
The other thing that I did is take some risk in my career. I’ve always tried to have a view of where I was trying to go two years down the line and then stretched myself to acquire the skills to get there.
What do you do for fun?
I’m always up for being outside near water or mountains. I love the mountains, I love to ski. I like to go fast.
I also get that high by driving a little sports car around London trying to keep to the speed limits here. I have a Mini John Cooper Works. It’s a lot of fun to drive.