Vision for the Future
New technological innovations will continue to compete for our order flow, and new government regulations will attempt to create a level playing field for all. Buy-side traders will continue to see a delicate balance between too much and too little regulation. We will continue to see old trends and rules in the industry - such as soft dollars (28e) - challenged, improved and clarified. The buy-side trader has to be able to react to these all very quickly and understand how the sell-side partners are adapting to them or how they are exploiting them.
Fun Facts
Tell us something interesting that few people know about your professional or personal background.
I play golf and spend time with my wife and two daughters, ages six and eight. That takes up most of my energy when I am not on the trading desk. My whole family plays golf together now.
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ICM Asset Management
601 W. Main Ave.
Suite 600
Spokane, WA 99201
Assets under management:
$1.4 billion.
Fund(s) for which you trade:
We are a separate accounts manager.
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Types of products traded:
Small-cap value, small- to mid-cap value, mid-cap value, and large-cap core and value. We also trade actively managed municipal and corporate bonds.
Daily volume in equities:
550,000 shares.
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Structure of trading department:
We have three traders on the desk, including myself and then one other senior trader and a junior trader.
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Previous Positions:
I came to ICM from Jefferies & Company, where I was an account executive. I spent approximately 10 years at Jefferies.
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TECHNOLOGY
Technology used to trade equities:
Our order management system (OMS) is Charles River Investment Management. We also manage accounts for several wrap programs on CheckFree's Security APL.
We use FIX, TradeBook and other liquidity providers to execute orders.
Chief Information Officer:
Scott Urquhart
How do you work with your CIO when it comes to getting new technology on the trading desk?
Our CIO has a very in-depth knowledge of trading and the goals of the trading department. If there is a new technology I am interested in, I go through the trading aspects of it, and then I go through Scott to get approval. If we find something from the technological front that will help us reach our goals, the approval process is a relatively quick process as long as it improves our efficiency and fits into our budgets.
LOOKING AHEAD
What trends/regulations/issues do you think will transform your role as a trader?
Our role as traders will always be impacted by government regulations. The new trends that are happening in our business, such as Reg NMS, NYSE Hybrid and 28e revisions, might change the way in which we execute our orders. But ultimately we will overcome these new changes, and we will continue achieving best execution for our clients.
What do you hope technology can change to make your role easier?
Any new product that brings new sources of liquidity to the marketplace will affect my job as a trader and my ability to get orders done. Our roles as traders will continue to change and evolve, and the successful traders that want to be around for years will have to adapt.
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PORTFOLIO MANAGEMENT
Describe your relationship with your portfolio managers?
We have daily updates with the portfolio managers and get constant feedback as to how the orders are going and where we are going with the orders. They also have Charles River on their desk, so they can see the status of the orders, since we're filling them and can see where they are. Charles River sort of ties the groups together from a technology standpoint. It hasn't really changed. It's always been a very close and open relationship ... in that they are always looking for feedback on the trading desk as to how the orders are doing and what type of liquidity we are seeing in the market.
ALGORITHMS
Types of algorithms used to trade:
We are still testing algorithms, and the current algorithms that I am using are offered by Tradebook and ITG. We have not entirely accepted the fact that algorithms work all that well for small-cap stocks. Of the algorithms we have experimented with, arrival price strategies seem to work the best.
How do you rate your brokers and determine which broker will get your order flow?
We do rank our brokers internally only based on the research that they provide, which acts as a guide, but we are always free to do business where we get the best execution. We have an internal rating system, which we use as a guideline.
INTERNATIONAL TRADING
In which international markets do you trade?
None.
Who do you use as a custodian bank?
We have approximately 50 custodians and more than 1,200 accounts, including various wrap programs that we manage.
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Interview by Leslie Kramer, Contributing Writer
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