Meet Alex Kieft, Head of Trading at Flow Traders

Meet Alex Kieft, Head of Trading at Flow Traders

by | Oct 27, 2021 | Blogs

Tell us about your role at Flow Traders, what does it normally involve?

Well, I joined seven years ago as a junior trader. After five years I became head of trading. So now I am responsible for about 40 traders and quant researchers that are working at Flow Traders in Amsterdam. I am involved operationally with the trading desks, mainly the equity desks, and I spend about 50% of the time working alongside the traders, motivating them, helping them with trading decisions where needed. From a leadership perspective, my role is about developing talent and therefore I aim to be approachable, open and flexible with the team. And then the other 50% of the time I spend more strategically on the long-term goals that we have at Flow Traders, namely becoming a one stop shop for liquidity in all financial products.

 


What does your day typically look like?

Yeah, so we come in early in the morning between 7.30 and 8.00, then we get briefed on the news that happened overnight in the Americas and Asia. Afterwards, I personally check in with all the desks to make sure there’s nothing extraordinary going on, helping them where needed to make sure we’re ready for the market open at nine o’clock, because then we need to make sure that we provide liquidity in thousands of instruments.

Then during the day, I am still checking in with traders whenever there’s something extraordinary going on, helping them along. And again, spending a considerable amount of time more strategically.


What do you like about working at Flow Traders? And about Market Making?

Everybody is extremely driven, determined to be the best every time. We’re also very tech savvy, so there’s plenty of opportunities to keep learning every day. We focus on fostering a dynamic and collaborated working environment. I have great co-workers, very international and also very diverse.

Market making is very fast paced and you immediately see the results of your actions. I have a background more in theoretical physics, where you can spend years researching something that may yield a result or not, but in trading it’s very binary. You immediately see the results and then that’s something that gives me a kick.

“Market making is very fast paced and you immediately see the results of your actions.”

What is it that makes you proud of what you do?

Two things, the first is that I’m part of this company that is very successful and one of the leading market makers. We’re successfully expanding into asset classes like bonds, currencies and cryptocurrencies, where we have this ambition of becoming a one stop shop for liquidity in everything.

And then, on a more personal and role based level. I feel proud whenever the new generation of traders comes in and I can help them grow and become sort of where I’m at now in my career. Whenever they do well that makes me pretty proud.


How did you get into market making, why did you choose market making as a career?

I had some affinity with trading but not that much. I was particularly attracted to the competitive element that is in there, as well as the people that I met in trading were extremely smart, and I thought to myself that I wanted to be part of this industry where you have an entrepreneurial mindset and people always wanting to be the best.

The impact that Flow Traders has and the relevance of being a market maker is also what appealed to me. Seeing the impact in practice and how we contribute to the efficiency and transparency of the market is really interesting.


What advice would you give to others who might be considering a career as a market maker?

If people have got what it takes and want to work alongside the smartest people, then I can only recommend that they do it, and we at Flow Traders like to create an environment for those kinds of skills to flourish.

We really stimulate people in their career so that they can grow from coming basically fresh from university with just an analytical skillset and not so much knowledge about financial markets yet, and within a short amount of time, we can teach them all the stuff they need, and then they will quickly grow into being successful traders themselves.

 

 

What does it take to become a market maker?

Well, obviously it does start with an interest in financial markets. You should be able to handle a dynamic working environment well, be able to react quickly. Next, you need strong numerical and analytical skills. Also, being able to crunch data.

Then on softer skills, here we really value teamwork, because we need to rely on each other on the trading floor and when we collaborate with different departments and regions effectively.

And finally integrity is a very important value for our traders.


The #WeAreMarketMakers campaign is about highlighting what market making adds to the markets and society. What is your perspective on this?

Flow Traders and other market makers serve society by improving the markets. We provide liquidity in many financial products which contribute to more efficient flows of money and capital, we lower the overall trading costs for any sorts of investments. We make sure investors, big and small, can trade at any time in the product they prefer,  for example, if they want to invest in green energy, market makers make it possible for them to do that at reason or at the lowest possible transaction costs.  We have a warehouse function as well. Every investor can trade any financial product under every circumstance with us. Even during real stressful times like March 2020, market makers made sure the financial markets were available and provided the necessary relief for investors in need for liquidity.

As a market maker we respond to whatever the needs are of investors. And we see increasingly that investors are focused on the ESG segments. There are now in Europe over 400 different kinds of ESG ETFs. And we trade on a yearly basis over 50 billion euros in such ETFs. We try to make sure that it’s as efficient and as cheap as possible for investors to invest in these segments.

“We provide liquidity in many financial products which contribute to more efficient flows of money and capital, we lower the overall trading costs for any sorts of investments.”

If you could tell people, one thing about market making and what it is that you do, what would it be?

As a market maker we provide liquidity so we make sure investments are possible, and people don’t have wait to do business. For example, hypothetically, if you have an illiquid asset, it can take you days or weeks  to sell it and you probably need to make a lot of phone calls to find a suitable buyer. With market makers in between, we make sure that at any given time, people can transact in these products and don’t have to wait until there happens to be interest on the other side.

A key impact of a market marker is also creating efficiency and transparency across the market.

 

 

To find out more about Flow Traders visit www.flowtraders.com

Necessity is the mother of invention: Covid catalysed creativity in capital markets

Necessity is the mother of invention: Covid catalysed creativity in capital markets

by | Oct 21, 2021 | Blogs

The idea that market makers, as electronic liquidity providers, are some kind of offshoot in liquidity provision has finally been put to bed during the recent pandemic. 

The market making community is becoming an increasingly large part of capital markets; a recognised destination for retail and institutional investors alike. It’s a shift that started some time ago, was expedited by the conditions that Covid created, and now looks set to lead to the institutionalisation of market makers and the service they provide to capital markets. 

Perhaps in the early days of electronic trading there were some market making firms that chose to put profit before long term client relationships; and that created an environment of mistrust. But that’s been broken down over the years by firms who have been more honest and open about what their trading strategy is. How they execute their order flow, and how they share information with their counter parties. Post trade data standardisation has been critical in the change because it provides that welcome level of confidence and trust. As one asset manager eloquently put it during my research for the Liquidity in the Time of Covid report: “You can take a turn but don’t take my shirt”.

“As one asset manager eloquently put it during my research for the Liquidity in the Time of Covid report: “You can take a turn but don’t take my shirt.””

When the pandemic struck there was still a healthy level of scepticism towards electronic liquidity providers. Traders wondered how and whether they would benefit from a participant with superior technology and the ability to understand their flow. But as some on the sell side started to pull balance sheet back a vacuum in liquidity was created, and many buy-side found themselves unable to execute their trades. Market makers saw this, recognized the opportunity and stepped in to fill the vacuum. They provided the liquidity the markets needed, and the wider behaviours that accompanied this shift were really encouraging. Market makers stepped up to educate a sceptical buy side, and there was much more dialogue and knowledge-share in routing practices than we’d seen previously. 

“Market makers stepped up to educate a sceptical buy side, and there was much more dialogue and knowledge-share in routing practices than we’d seen previously.”

The report is very clear that, during the period of heightened stress in the markets, automated trading helped to keep capital markets moving. But perhaps what’s even more interesting is the ongoing influence of that shift even today. We are starting to see a knock on impact on what assets are being invested in and how trading takes place. So rather than an asset manager looking to get a single ticket done in £30million they are starting to think more creatively about the different ways they might execute that order. That might be with one electronic liquidity provider they engage with and then they are able to increase their order size. Or increasingly, looking at different ways to get the same exposure. So rather than a single issuance for 2029 for example, perhaps they’ll get the same exposure but change the assets they trade so that they get exposure over 2025, 2027 and 2029.

As the markets have normalised, the buy side has started to recognise the importance of having optionality, so they have different types of providers they can go to for different types of flow. Today, it’s much more about making sure that you have the right trading partner for the right order flow that you are looking to execute.  By offering broader optionality, market makers have not only grown their own market share during the pandemic, but opened new horizons for all market participants by democratising access to liquidity. Their presence has meant that everyone and anyone can enjoy the same access, creating a more level playing field for all participants, whatever their tier or type. It’s a sign that the markets are evolving and signals how different market participants are working together within the wider eco structure to create the better outcomes for everyone.

“Today, it’s much more about making sure that you have the right trading partner for the right order flow that you are looking to execute.  Market makers have not only grown their own market share during the pandemic, but opened new horizons for all market participants by democratising access to liquidity.”