TD Bank uses automation to trade more bonds
Business Business:Toronto-Dominion Bank is winning more and more business from Wall Street in bond trading, and doing it with fewer people.
The Canadian bank has built a computer-driven trading team over the past few years that has helped it rise up the U.S. league table in investment grade corporate bond transactions on MarketAxess Holdings Inc., the largest venue for electronic bond trading.
The bank has risen from 20th place in 2021 to 9th last year and 6th so far this year — surpassing big banks like JPMorgan Chase & Co. and Citigroup Inc. in the number of total trades — and it now tops the table for municipal bond trading. To do so, it has doubled its automation team over the past four years and poached automation experts from rivals like JPMorgan.
But according to Marty Mannion and Matt Schrager, co-heads of TD Securities Automated Trading, algorithmic trading has allowed even more employees to be removed from the ranks of old-school voice traders who dominated the fixed-income world from their phones.
“Technology and automation will lead to more efficient teams over time,” Schrager, the 35-year-old division co-head, told Bloomberg in an interview last month.
The changes at TD offer a glimpse of the automation that is sweeping the fixed-income industry and making jobs redundant across Wall Street. Last year, 48% of U.S. investment-grade bonds traded electronically, up from 34% in 2021, according to Crisil Coalition Greenwich.
Schrager and Manion declined to offer a specific number of jobs that have been cut and said humans remain a necessary part of their operations, partly to oversee the computers and partly to handle trades that are large or require phone interaction. But they estimate that more than 90% of transactions will eventually be automated.
TD’s efforts to take advantage of this are a central part of the bank’s ambitions to join the big leagues on Wall Street. The effort is particularly important for TD as it tries to recover from one of the worst money-laundering scandals in U.S. banking history, which led to a $3.1 billion fine and a limit on the size of its U.S. retail banking business.
