Goldman Sachs trader says Wall Street was never the same after coronavirus

Every morning Monday through Friday, Moran Forman wakes up in his Chelsea apartment, steps into a spare room, and turns on all the power of Goldman Sachs on a curved LCD screen.

Forman, a 33-year-old managing director who leads a team of seven traders operating on equity index derivatives, says the technology allows her to feel so connected to her coworkers and clients that she rarely misses being in the market. Goldman’s headquarters a few miles south.

“I could be anywhere in the United States right now, and my ability to communicate and manage my team would be similar,” Forman said in a telephone interview. “It has been surprising to see how much productivity has potentially increased during this period, while everyone is still apart.”

For decades, Wall Street has been a rooted place in vast physical rooms filled with rows of crowded monitors, specialized phones called turrets, and workstations operated (mostly) by men between the ages of 22 and 45. This culture survived all the calamities, caused by man and otherwise, to move to institutional trade in the last 20 years: the change to the decimalization of shares; the attacks of September 11, the financial crisis, the increase in passive investment and Hurricane Sandy.

But now, after the coronavirus pandemic forced merchants to work from home, Wall Street has gone virtual, triggering a cultural shift that is only just beginning to be understood. As weeks at home turn into months and operators get used to new technology platforms to stay connected, Wall Street, which has never allowed operators to operate far from the floor, is likely to be permanently changed by the coronavirus, According to merchants, bank executives and CEOs of technology providers used by banks.

Working from home is now a routine for Forman, a rising star in Goldman who was 8 months pregnant when she spoke to CNBC.

It relies on Symphony, a messaging platform for investment banks similar to Slack, to create chat rooms for teams and internal clients, and Zoom to make teleconference calls with Goldman merchants and clients. On any given day, you have 50 open chats with hedge funds, asset and pension managers seeking advice on the complexities of placing large trades, usually to protect yourself against losses or bet on volatility.

With all of these workplace tools at his disposal, including a Goldman-issued Cisco phone that records conversations and enables you to reach contacts at the push of a button, Forman said the transition has been easier than he would have imagined. It doesn’t matter that colleagues are spread across the country, working from homes in Atlanta and Florida, as well as from Goldman’s offices in Jersey City and Greenwich, Connecticut.

“Before you had crossed the trading floor to communicate, and you somehow assumed that everyone knew what was going on because there was this assumption of knowledge transfer happening on the floor,” Forman said. “Now you are forced to be more systematic and efficient in communication.”

While companies have been investing in digital tools like Symphony for the past few years to keep up with a younger workforce accustomed to excellent consumer technology, it is only now, amid the pandemic, that they have become crucial, said Ying Cao, director of digital strategy. for London-based investment bank Barclays

“People used it before, but you were also face to face,” Cao said. “With a highly distributed workspace, it is important to have a group of people in a single chat room who can be seen writing and sharing information in real time, rather than sending an email and you don’t know when that person will respond.” . “

The implications for remote work will be long-lasting, Cao said: “Once you’re at home and realize it’s so easy to do business, you don’t want to travel two hours a day just to chat with people.”

Exhibit A on how the new Wall Street works is the industry’s first quarter results. Banks sent traders home in the second week of March, as the pandemic was wreaking havoc, causing a historic increase in equity volatility and dislocations in credit markets. IT departments worked 24 hours to equip thousands of merchants for the task. But the five largest investment banks in the US USA They posted their best trading quarter in nearly a decade, as both bonds and equity tables easily exceeded expectations.

Morgan Stanley CEO James Gorman marveled at the results, which coincided with ten of the highest volume days for recorded stocks.

“If you told me three months ago, we could have 90% of the employees out of the office and be operating at the volumes we had,” Gorman said in an interview with CNBC, “I would have said the probability of that being accomplished.” it’s close to zero, but it happened. “

Now, as the discussion turns to when New York, the global epicenter of the coronavirus pandemic that sees a decline in coronavirus deaths in recent weeks, may begin to reopen, banks are planning to return workers. .

It will not be as always. Banks could bring half of their staff back, but doing more than that will be difficult as employees still need to keep their distance from each other.

Companies, including Morgan Stanley, are seeking to keep workers masked and leave all other seats empty, and have even considered installing plastic partitions between desks. Goldman is looking to install infrared body scanners at building entrances, and banks such as Citigroup and JPMorgan Chase are discovering how to prevent hallways and elevators from becoming focal points of contagion.

“Part of our workforce will no longer have to return to the office full time,” said Bob Santella, CEO of IPC Systems, the leading maker of commercial turrets for Wall Street. “There will be pressure to space people more in the office, and my expectation is that this will be offset by a higher percentage of people who work from home who don’t.”

This interim period could last 12 months or more, Santella said, meaning that people will continue to rely on technology platforms rather than face-to-face contact. Since the coronavirus pandemic occurred, IPC has sold more than 10,000 licenses for “soft turrets,” cloud-based telephones for remote work, or six to seven times more than last year.

“People have become dependent on Symphony for their daily activities,” Symphony CEO David Gurle said in an interview. “It is an essential element of their business in the future because they do not believe that this is a unique event, they realize that pandemics could be the new reality.”

The new Palo Alto, California-based startup said that from January to March, network message traffic increased by 273%, while daily active users increased by 42%.

The story is similar for hedge funds, which have been using Microsoft Teams and Skype, according to Chris Grandi, CEO of Abacus Group. His IT firm serves more than 500 hedge funds with a combination of $ 750 billion in assets under management. Even more than banks, hedge funds are likely to adopt a post-coronavirus model where workers do not need to be physically present, he said.

“It doesn’t matter if you’re a New York hedge fund or a Dallas hedge fund or a Minnesota hedge fund, no one works in the office anymore,” Grandi said.

However, it did not go perfectly well. Financial services has been considered an essential business, and although 95% of investment bank staff at JPMorgan and Bank of America have been sent home, that means some workers never stopped going to the office. In March, senior business executives at both banks pressured staff from certain teams to enter, even when the workers fell ill, according to multiple media reports.

Having traders under one roof has always been valuable after all. Transactions often take longer now as people expect responses that used to be more immediate in person. A high-yield trader who detects a dislocation in a company’s debt could warn a nearby stock trader of a short-circuit opportunity, for example. Junior operator mentoring will always be easier face-to-face.

But now, artificial intelligence robots can fill the gaps created by remote work, said David Donovan, who spent 25 years in stock trading before joining Publicis Sapient as a consultant. For example, a program could automatically alert merchants to momentary business opportunities in the same way that colleagues used to, he said.

Wall Street remains a bastion of men, particularly at the upper levels, and Goldman Forman hopes the ability to work from home will help address that. While banks have been hiring more women and minorities outside of school, these people can stay in the industry longer if it evolves beyond the old business floor rules.

Despite the advantages of working from home, Forman admits he has lost an aspect of old Wall Street: There is a palpable buzz in the air of an operating room at the start of the operation at 9:30 a.m. as phones ring and conversations ring.

“Now, the difference between 9:28 a.m. and 9:32 a.m. is really nothing, you just have to look at your screen and say, ‘Well, yes, we open,'” Forman said. “I keep CNBC just to remind me about the flow of the day.”