My friend Marge Wyrwas, head of investor relations at Knight Securities and a stalwart in our trade association, NIRI, the other day sent me the agenda for TradeTechUSA the US version of the investment industry's premier confab on equity trading held in New York last month. There's a European edition in Paris later this month, and one in Asia each year too.
You might think with a title like "TradeTech" that the butts in the chairs would belong to people from hedge-fund ether, that mysterious mix of quantum theory and economics. Au contraire. Keynote speaker in New York last month: John Bogle, founder of Vanguard. Faculty from American Century, Franklin Templeton, Morgan Stanley Investment Managers, Goldman Sachs Asset Managers, Metropolitan Asset Managers. Tracks and panels populated by Putnam and Federated Investors and Mutual of America and Lee Munder and Loomis Sayles and TIAA-CREF.
These firms' representatives were teaching and sharing and mixing and meeting and greeting with the likes of Citadel and Flextrade and Neonet and Pulse Trading. And Knight Securities and Deutsche Bank and Merrill Lynch and JP Morgan and Bear Stearns and BNP Paribas.
The lesson: these massively mainstream and decidedly un-fringe-ish firms were comparing notes and sharing ideas for addressing the herculean exigency of liquidity, the mandate to moderate and manage risk, the pressing essentials of controlling execution costs while juggling rapidly changing and fragmented asset mixes.
Isn't this just trading, though, and of no consequence to IR professionals? Modern trading realities bear no relationship to the didactic nature of conventional IR targeting, messaging and measurement. Right?
Wrong. If buyside and sellside priorities have moved away from fundamentals and have become firmly embedded in the economics of participating in equity markets, if you still do the same things you did, you're playing baseball on a lacrosse field. The rules and the end game have changed.
Yes, we IR people still, and will always, engage in strategic communication efforts. But if we don't start paying attention to how the buyside and sellside trade our products—our equities—we will waste gobs of valuable time and money and see our relevance to shareholder value and the cost of capital steadily erode. These ultimately are the reasons any company is public in the first place.
What are we to do in this crazy new world run by machines? Think strategically but start acting more tactically. Pay attention to relationships between firm-specific trading volume and research notes…or the absence thereof. Learn your market structure and how it evolves relative to risk-management. Stayed tuned. We'll do our best to flesh these things out as we wend ever deeper into 2008.
Margaret E. Wyrwas - Knight Capital Group, Inc. (Nasdaq: NITE)
Senior Managing Director, Corporate Communications & Investor Relations
Equity Analysis™ subscriber since March 2007
"In global markets driven by automation, changing market structure regulation and dynamic investment objectives, today's investor relations professionals require new data points in order to remain relevant and add value in their company's quest to reduce its cost of capital."
