Anita Karppi, MD, The Buy-side Trading Community (BTC) by K&K Global Consulting (K&KGC)
London, 3rd October - At the 7th annual Alpha Trader Forum (ATF) on the 6th and 7th February 2019 in London, The Buy-side Trading Community (BTC) by K&KGC under took the responsibility to investigate how the buy-side community could cultivate greater gender diversity at the buy-side trading desk. Following up this task, we discussed the issue at the recent Alpha Trader Forum (ATF) debates in Stockholm, Paris, Frankfurt and London and it was enlightening to see the number of men and women who feel strongly about this issue, with some explaining their individual efforts to ensure there is no bias in their recruitment efforts and are recruiting talent of both genders from a more diverse pool. The research also highlighted the important pre-requisites enabling such activities.
Here is a graph showing an overview of opinions from 129 buy-side heads of trading and senior traders across regions and asset classes:
NexT steps: #buysidewomen webinar
28th November 2019
Copyright: K&K Global Consulting Ltd. 19th-23rd May 2019
Possibilities to work from home and more flexible working hours
We know from previous discussions it is not always possible in all firms to work from home due to compliance and system limitations but some firms are considering solutions for staff to work from home making it more appealing to work at their firm. The buy side said that the additional empowerment placed a feeling of responsibility to work harder in return. The possibility to work from home and having flexible working hours is not just a requirement for women but enables both men and women to share family responsibilities such as dropping and picking up children from school or day care. Regardless of whether this incentive relates to a man or woman, the finance industry can help break down the barriers and lead the way for other industries to do the same. The important pre-requisites for more flexible hours would of course be for trading desks to have sufficient staffing arrangements and processes to cover individuals who are not working. Such staffing arrangements should be considered as part of the firm’s contingency plans to allow for sickness, holiday and parental leave. Many asset management firms are yet to implement such staffing contingencies as some buy-side traders shared their own experiences of how staff are forced to work and de-subscribe to legally required working conditions.
Shorter market hours
This topic is particularly pertinent within equities trading however trading hours in other asset classes would potentially be impacted if European exchanges shortened their hours. Europe has the longest exchange open hours with both bank sponsors and equity buy-side traders united in sentiment that it is unnecessary to keep the overlap with three Asian markets. The peak in equity trading in the morning would still remain if the exchanges opened later which would make a significant impact in the work life balance for traders and thus making the asset management and banking industry a more attractive work place. The BTC have formally requested the Federation of European Securities Exchanges (FESE) to comment on this issue as this would need to be a concerted effort among stock exchanges.
Attracting the younger generation to trading
A major challenge to attain greater gender diversity is that very few young people, especially women, are attracted to the finance industry as it is no longer generally considered as one of the coolest work places. Through negative media and cinematic channels, the capital markets reputation has been tarnished and now requires major efforts to help improve the image. The new millennial generation is receptive to workplaces that shows they care about diversity issues. One major bank mentioned how they make efforts to attract younger talent away from the likes of Google and Amazon with dress down days and a more appealing office interior. A few buy side traders have commented on their efforts to offer temporary job experience roles to give a taster on working within the trading desk. One question, received in confidence was “to what extent would a woman tolerate the abusive and colourful language that often occurs on the trading floor?”. The concerted feedback from buy side and sponsors is that abusive language during the working day sits firmly in the past and neither men or women of the younger generation would accept it.
Firms that have already made an effort to increase gender diversity find that the next challenge is to promote women in to management positions. That is under the presumption that firms are able to promote staff internally which can be a challenge in an industry under tough pressures.
Another interesting area, slightly outside of trading responsibilities, is the buy-side firm’s commitment to ESG (Environmental and Social Corporate Governance) investments, an area that should appeal to the next generation. We would love to hear more buy-side stories about how firm’s commit to adopting more ESG investment to increase the attractiveness of both clients as well as new staff.
While the industry is calling for actions to attract a younger generation to increase gender diversity, the BTC also want to stress the importance for firms retaining senior experienced staff to support ‘age diversity’.
Shared parental leave Scandinavian style
Some of the greatest success stories we have heard regarding gender diversity at the trading desk originate from the Scandinavian countries. In Sweden, parents are given 12 months of parental leave and the father is strongly advised to share that time equally with the mother. We have already heard how one large buy-side firm’s trading desk has put this Swedish legal practice in place by employing back-up staff to cover sick leave, flexible working and parental leave successfully. Such back-up staff should ideally be permanent staff as the skills required for the job takes time to learn. Most other European countries offer only 2 weeks of paternity leave yet we have heard of examples of firms offering a longer paternity leave to lead by example. Encouraging both men and women to utilise their right to parental leave in an inclusive work environment is seen as a key question. The buy-side heads of trading discussed the challenges with parental leave for over stretched trading desks and the ideal scenario is that the employee is forthcoming in trying to find a solution that works for both the firm and the employer.
Back-up staff to cover
This is a particularly interesting challenge open to misinterpretation. Back-up staff does not necessarily mean that each firm should recruit more staff than necessary. It means that the firm should consider employing a flexible work force that backfill staff who are given the right to sick leave, flexible hours and parental leave. Out of the three examples just mentioned, two are legal requirements and the firms need to consider a contingency plan for such requirements. Some firms are using the old corporate financial benchmark turn-over and profit vs. number of staff headcount which would be unsuitable when you implement such cultural change within a firm. Therefore, such cultural changes must be driven from the top management down.
Broadening the search pool and reviewing the necessary skills in job applications
With an increasing interest in quant skills on the trading desks, one needs to evaluate the profile needed for the particular trading role you are hiring for. One needs to ask the question if the listed skills requirements in the job description are necessary or just a legacy ‘good to have’ but this potentially skews the search to more male dominated universities. We hear from the buy side that ‘diversity of thought’ is proven to generate a more progressive and successful work environment so if that is true, logically, we need to welcome people with a more diverse set of skills and education.
An annual invite your daughters to work day
We have learnt it is a tradition in Germany to have a “Girls Day” where employees invite their daughters to stereotypically male dominated jobs and sons to typically women dominated jobs.
I recall asking my daughter, when she was three years old, what she wanted to be when she was older and she said; “I want to become a nurse like grandma!”. I asked why she didn’t want to become a doctor instead and to my surprise she responded that “boys are doctors and girls are nurses”. This is not a result of any values that had been taught at home. I realised how the wider social environment and TV programs had impacted her values. Subsequently, we had a discussion about her views explaining that if she raises her ambitions, she could potentially help more sick people with more efficient treatments compared to the care a nurse is entitled to give and that there are no limitations in abilities and aspirations due to one’s gender.
NexT steps: #buysidewomen webinar
28th november 2019