Commodities and Global Markets Podcast Series
Recorded on 28 July 2020.
Voiceover: Welcome to the Macquarie Podcast Series featuring Commodities and Global Markets
Bevan: Hello, everyone. My name is Bevan Murray and I’m a senior VP in the Fixed Income and Currencies team in London. I’m delighted to welcome you to the fifth episode in our Macquarie Podcast Series featuring Commodities and Global Markets. Today, I’m pleased to welcome Tom Freeman, Managing Director in the FIC team. Tom, thanks for joining us today. Why don’t you start by telling us about your career and how you got to where you are?
Tom: Good morning, Bev. Thanks for having me and thanks for the coffee. I actually joined Macquarie while I was still studying at university in Sydney as part of a scholarship program that was running at the time. Since then, I’ve been lucky enough to work at a few places: Hong Kong, Singapore, New York and now London, both with Macquarie and at another investment bank. Most of my career has been trading in financial markets focused on currencies, interest rates and commodities. A couple of years ago I completed my masters in the US, where I met an awesome group of people. And more recently, I have also been working on Arora, our new digital platform for CGM, Commodities and Global Markets.
Bevan: Before we talk about that digital platform, which sounds exciting, what advice do you wish someone had given you at the start of your career?
Tom: Well, I’d say two things. First, always try to play the long game. Focusing on short-term goals and achievements is obviously important for progress, but when you’re making those really big career decisions, always have longevity in mind. Focus on what it is you enjoy and what you really want to do. Second, be flexible and open to new ideas. We live in this dynamic world that’s constantly changing. We all need to be prepared to change with it.
Bevan: Digging into that further, Tom, was there one decision you look back on and think, “I’m glad I chose that path”, or one person that was influential in your career?
Tom: Yeah, I think for me, moving offshore really opened my eyes to how deep and interconnected global markets are, and the importance of things like geopolitics and cultural considerations that can’t always be modelled. This really helped me understand where CGM fits into that world, what our strengths are and how we can leverage them. Alongside that, the FIC business has a core group of leaders that have been in Macquarie for a very long time. As a group they have been fantastic mentors for me professionally and they have created a great team culture which has ultimately driven the success of the business. What about yourself, Bev? You’ve worked in a few of our offices, what’s the best advice you’ve been given?
Bevan: I guess the best piece of advice I was given was from a senior leader in New York while I was a grad. He explained to me that the trading floor was a diverse mix of people, all with different strengths, traits, personalities and sets of expertise. He advised that, rather than mirroring one person, that I should open my eyes and look around and take what I deem to be the best quality of each person I work with every day, to use each snippet as inspiration, to mould myself throughout my career. I found that advice really useful. Back to you though, Tom. What are your passions and interests outside of Macquarie when you get time to relax?
Tom: Well, I enjoy sport. I’m a rugby fan at heart and I played a little in my younger days. I have enjoyed watching Australia chalk up regular victories against the mighty Irish. Unfortunately, they’ve been few and far between elsewhere recently. I also really enjoy music. Believe it or not I was in a band in a previous life and we used to play a little bit on the covers scene in Sydney. We weren’t very good but it was a lot of fun. I always found having that creative outlet gave me a little bit of balance at work.
Bevan: Agreed, Tom, there have not been many Australian victories against Ireland of late. But let’s turn back to the FIC team. Can you give us a snapshot of what the team does?
Tom: Yeah, certainly. We run a global client-focused sales and trading business with major operations in Sydney, Singapore and Japan for Asia, London for EMEA and New York to cover Canada, the US and Latin America. Across these regions, in foreign exchange we cover all deliverable and major non-deliverable currencies, options, forwards, swaps and cross currency products. In FX derivatives, we have a particular focus on structured products in Japan, Europe and Canada. Our interest rates desk covers major developed markets and select emerging markets where we have particular regional strengths. We have a securitisation business in Australia and London that focuses on origination, structuring, distribution and credit trading across mortgages, secured loans and corporate credit. And finally, we have strategic training and cross border groups that focus on macro and credit trading opportunities across global financial markets. Our client base across FIC is diverse, encompassing corporates, credit funds, private equity, pension and sovereign wealth funds, asset managers, hedge funds, non-bank financials and even a few sporting clubs here in Europe.
Bevan: On that, you actually recently moved to not so sunny London. Before that I believe you were based in Macquarie’s New York based office. What specifically brought you here to London?
Tom: Well, in the last five years we’ve witnessed an enormous amount of technological innovation in global financial markets. And it’s happening in a way that really challenges traditional business models. In response to this, we recently launched a digital platform for FIC and CGM that allows us to engage with clients electronically. This digital engagement is fast becoming a crucial part of our customer-facing businesses in FIC. And we see that spreading to other areas and products right across CGM. The project itself involved partnering with the UK-based fintech company that specialises in digital product delivery and electronic trading. To align our interest with the founders, Macquarie recently took a minority equity stake in the company that will allow us to collaborate in a much deeper fashion and combine our various areas of expertise. While we are now live in our core products, we anticipate this platform will take another two to three years to complete right across CGM. So being close to the company headquarters here in the UK made a lot of sense for us strategically. There is also an enormous amount of product expertise concentrated here in CGM’s trading room in London. Having access to that knowledge and experience will only add to the development of the platform over time.
Bevan: Where does most of the business take place in the Macquarie FIC world? You mention that there’s a lot of people here in London, does it give you an advantage also being based in London?
Tom: We really are a global business, with a strong focus on our areas of expertise. We certainly don’t try and compete in every market. But we concentrate our resources in places that our clients are active and that offer appropriate returns on capital. Our headcount is pretty evenly distributed right across the globe, so in terms of location, London is a natural mid-point between APAC and the Americas for us to reach all parts of the business. Europe is also the largest market for interest rate and currency products globally. So yeah, there is some strategic advantage to being here in the UK.
Bevan: Agreed, it makes a lot of sense to me. You mentioned earlier that we partnered with a UK-based company. Are joint ventures and equity investment between fintech firms and banks common?
Tom: Well, yes, it’s certainly becoming more common. Some of our competitors are pursuing similar strategies across capital markets, lending and regulatory tech. I think with banks increasingly realising that technology is changing the financial landscape, some have moved to partner with fintech specialists who are providing these innovative and expert solutions to complex problems. These arrangements can achieve a number of things depending on who you are, but primarily for us we think it provides strategic security and also unlocks those synergies created by the combination of our financial product expertise and their technical ability in electronic trading and platform delivery.
Bevan: I’d like to expand on that further, Tom. It appears to me that digital disruption is clearly taking place within the industry. For Macquarie, should this be seen as an opportunity or a threat?
Tom: Digital disruption, opportunities, threats, this really is the key question of our time for a number of industries and governments. After quite some time looking at our key markets and clients, we made a firm decision that market structure was fundamentally changing, and the way we interact with our customers had transformed permanently. As such we needed to adapt to remain competitive. Now, obviously, this can be daunting, but the reality was for us the shift was irreversible, so there was no point burying our heads in the sand and ignoring it. We were really forced to look at our digital strategy. We tried to recognise the drivers had changed, access the impact and then find a way to turn it into an opportunity that benefited our customers, our teams and our business.
Bevan: You mentioned digital strategy there, Tom. Can you elaborate on that a little bit? What exactly do you mean by that?
Tom: Well, we tried to frame our digital strategy around three key drivers: access, engagement and customisation. Firstly, clients increasingly demand access to our products and services in a way that needs to be easier and faster than ever before. So, how do we, CGM, enable our customers to access our businesses at any time, from anywhere? If a client in Japan needs to trade gold denominated in Japanese Yen, we should have a solution that allows them to do that in the easiest and fastest way possible. So, providing access to our products and pricing, on an electronic platform, is really key. Secondly, engagement. How do we engage with our clients on a regular basis, so that we remain relevant and their first point of contact when they need assistance? Technology really allows for this constant engagement and ideally facilitates stronger relationships with our customers across a broader suite of products. We have witnessed this in FIC already, where our relevance in the electronic space has led to valuable secondary business from clients that had otherwise been dormant for some time. And finally, customisation. How can we ensure clients choose what they want to see, when they want to see it? A flexible digital platform that includes everything we have to offer, whether that be pricing, research, strategy or new products. I’m sure as a salesperson, Bev, a lot of that resonates with you?
Bevan: For sure. Since launching last year, the clients have been pretty excited about the new platform, too. It significantly has improved our service and ultimately saves them money by improving their execution and lowering their transaction costs. Moving on, what does a typical day look like for you, Tom?
Tom: Well, I’d usually start by checking in on market developments overnight to access our liquidity, our price construction and market functioning. We run a principal pricing model in FIC, so when clients deal with us, we are effectively assuming the market risk on those trades. We will then make decisions on how best to manage that inventory, so all of these things I just mentioned are important considerations for us. I’ll then have a couple of Webex calls with Sydney, Tokyo or Singapore to discuss the progress with the product roll-out in Asia. Following that, I’ll usually have a chat to our technology partner to get an update on the completion of our latest development requests. We’re really trying to make regular updates to the platform, so this generally involves multiple conversations daily between our teams and theirs. The rest of the day I’ll check in with yourself and the various sales teams on client requests and onboarding, and alongside that there’s the usual compliance and supervisory elements that come with any front office role in CGM.
Bevan: Sounds like you’re pretty busy then. But what about your typical analyst in FIC? What type of day would they expect?
Tom: When they join the business, we try to give our analysts a well-rounded view of the business. This might involve spending time with sales and trading teams across the various products we trade. It’s a really nice way to introduce them to the business and allow them to familiarise themselves with our teams. And to be honest, they have been great about reaching out and trying to learn as much as they can despite the challenges of COVID-19.
Bevan: On that point, have you noticed any difficulties for Macquarie and our clients in this COVID-19 environment, and / or has there been any opportunities?
Tom: Obviously, being able to work remotely and effectively has been very important from a business continuity perspective, both for us and our clients. Thankfully, the platform we have developed allowed us to continue to service our clients electronically regardless of where any of us are physically located. The need to hedge during the volatile period of market dislocation was paramount for many of our clients, and it was pleasing to be able to continue to service them when the entire world was in quarantine. Continuing to be able to service them from anywhere in the world will be key over the next six to 12 months. And depending on how permanent some of the societal impacts are from COVID, I suspect for a long time beyond that. With remote working likely more prominent going forward, the idea of that digital engagement with clients – whether that is for sales, trading or research – is a theme that is likely only to gather pace. In response to that, we do have a mobile trading app we are planning to release shortly which will be another big step for us in allowing constant access and engagement with our clients.
Bevan: Looking forward, Tom, how would you sum up the next 12 months for the FIC team, and in particular this digital platform?
Tom: The message from the top has been be alert, aware and prepared. Clearly, global markets are in unchartered waters. We have just witnessed the largest synchronised global economic slowdown since the 1870s, followed by unprecedented and coordinated action from central banks and government. Over the last few months, we have accessed the outlook for our businesses and continued to be in a heightened state of awareness for risks across the markets we operate in. Our clients are relying on us now more than ever to assist in managing their own exposures. And this really is the time to reinforce those core principles of Macquarie in everything that we do: accountability, integrity and opportunity. For the digital platform, it’s really about increasing the distribution to all our clients globally and including as many of our products as we can in a timely fashion.
Bevan: And finally, for graduates and interns who might be listening, why should they choose Macquarie and in particular Commodities and Global Markets?
Tom: Well, I’ve had the opportunity to work outside of Macquarie with another large European investment bank and also in many different financial markets across Asia, Europe and the Americas, and I have to say that Macquarie is truly a unique place. Our ability to choose the markets, products and regions we want to operate in is refreshing. The diversity of our teams, our institutional policies around environmental, social and governance and the high-quality leadership from those at the top in my eyes differentiates Macquarie from many other companies. It really creates an environment to think innovatively about the future. I’ve been incredibly lucky with the people I’ve worked with. I grew up on a farm in a small town of 30 people in regional Australia. And here I am, talking to an Irishman, in London, about fintech solutions in global markets. There are always challenges in every path you choose, but so often in CGM, it is the quality of the platform and the people that help you succeed. What about yourself, Bev? You’ve worked at Macquarie for 11 years now, what do you enjoy most about working here?
Bevan: I have really enjoyed the freedom here at Macquarie to explore different opportunities and locations throughout my career. I began as an intern in Sydney, then I eventually started full-time in FX trading in Singapore. I then moved to sales in New York, where I wore loads of different hats throughout my time there. Specifically, I was immersed in many different products, both in developed markets and emerging markets. I also had the latitude to get involved with projects that were interesting to me. This e-revolution is case in point. And here we are, both in London embarking on the next and exciting step of our career. What I’ve enjoyed about Macquarie is exactly that, the varied hands-on experience and then also going down the path that suits my skillsets and interests. Tom, we’re running out of time. Thank you for that insight into your career and the FIC team. For those listening, thank you for joining today’s podcast. I hope it has provided some inspiration as you consider your own careers. We look forward to welcoming you to the next episode in the podcast series next month.
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