Credit Suisse Bets on High Touch Human Traders

  • Credit Suisse has 30 senior traders in the Americas
  • Q1 2018 profit grew roughly 16%

Wall Street firms tend to be all in on electronic trading, while slowing down on investing in actual people. Credit Suisse (CS -2.72%) is taking a different approach to its robust trading strategy by ramping up on human capital. Should the market start valuing human traders again?

Why This Matters: Currently the company has 30 senior traders in the Americas. Profit for Credit Suisse’s most recent quarter grew roughly 16%. The results showed the bank benefitting from CEO Tidjane Thiam’s three-year plan to focus on wealth management over investment banking. One of his main focus areas was the company's global markets trading unit, which has been the source of billions of dollars in losses in recent years, which rose to 295 million francs ($298 million).

If we take into account the shift from active fund management to passive investing, firms have limited trading opportunities that serve hedge funds. Also, sometimes the most difficult trades are often the largest. For example, a massive order which represents a big portion of average daily volume for a certain stock may not be well suited for electronic trading. Instead, it may make more sense to speak with a sales trader for a client to unload the entire position. 

As traders look to redefine their value in a market with rising volatility they will have to reverse the declining order trend by human traders. Sales desks staffed by actual people only handled 33% of orders in 2017, down from 43% in 2014, according to data from TABB Group.

Situational Awareness: The move to electronic trading from human brokers has also put pressure on margins. Be sure to see if this move has a positive impact on earnings for Credit Suisse when the company reports on July 27.

CBx Vibe:The Switch Up” Nick Grant Feat. Yo Gotti