Expert voice: the trading room

Our "Expert Views" video explaining the role and stakes of the Trading Room for the Private Banking activity. By our SGPB expert Jonathan McKenzie, Head of Prime Market Access Team at SGPB Luxembourg.

1.    What is a dealing room?
The trading room is the place where all the services and staff required by authorised financial institutions to trade on the markets are located. It is generally organised into "desks", i.e. teams specialised by product or customer, and is the mandatory intermediary between investors and the financial markets.
The trading room offers many services, but first and foremost the possibility of dealing in a wide range of financial products: securities (equities, bonds), currencies, listed derivatives (listed options, futures or customised products (structured products, OTC derivatives)). It is the central point for all market transactions, whether on behalf of large companies in investment banking or smaller entities and individuals in private banking. 

2.    An important part of the private banking system
Every private bank needs to call on the services of a dealing room, if only to execute its clients' orders. Some prefer to delegate the management of their orders to outsourced trading desks, while others choose to have one within their bank. Whatever the system, the trading room is the place where all the bank's customers' transactions pass through, and its objective will therefore be to improve the quality of execution, whether in terms of the speed with which orders are handled or access to competitive prices. The challenges facing the trading room are many: on the one hand, to develop its network of brokers and counterparties so as to be able to offer the best possible liquidity and therefore the best possible price for each financial product. Secondly, to automate and streamline order taking.
In addition to placing orders for all asset classes, the dealing room combines a number of areas of expertise that are essential for supporting private banking clients and meeting their specific needs. It must be able to meet the requirements of very different types of client: some professional clients, such as family offices, need the expertise of specialists in each asset class. They therefore need direct access to the dealing room. These structures also have specific needs linked to the structuring of more complex products such as structured products and derivatives, as well as access to leverage via dedicated financing.  They therefore require rigorous monitoring in terms of risk management. 
Other customers, such as financial intermediaries (FIMs), handle a much larger volume of transactions. In this case, they may prefer to automate the transmission of their orders, either by providing tools for direct input by the managers, or by setting up electronic connectivity (such as the FIX protocol) between the manager's order placement system (their Portfolio Managing System) and the trading room tools. In this way, the flow is automated, from the entry of the instruction by the manager through to execution on the market and posting to the account, requiring no human intervention. 

3.    Société Générale Private Banking expertise
Société Générale Private Banking offers two complementary services giving direct access to its Luxembourg-based dealing room:
- Prime Market Access, dedicated to professional clients who are very active on the markets, such as family offices or investment professionals. This service gives direct access from 8am to 10pm to the dealing room specialists and combines the technical expertise and financing capabilities of an investment bank with the customised support of a private bank.
- Direct Market Access, dedicated to financial intermediaries (FIMs), offering an integrated execution platform with the possibility of automating order flow by various means, including the use of the FIX protocol.
For more information on the challenges of a trading room, please contact your Société Générale Private Banking private bank.