HoT: Could you tell us something about your background and the career path that has bought you to your present position?
AV: My career began on the sell side and my initial role was to advise Tokyo based Japanese institutional investors on their European equity portfolios. I started out as a research sales person working first in Tokyo and then I carried out the same role in London for a number of years. It was in that role that I became familiar with DIAM as one of the major institutional asset managers in Japan and with the London operation of DIAM (DIAM International – which was previously DLIBJ Asset Management). I joined as Head of Trading in 2007 and my mandate was to reorganise trading for equities which had previously been carried out along regional lines (Japanese equities trading was therefore separate from European / global equity trading and from quant trading). I brought together an integrated equity trading desk to cover all of DIAM International’s equity clients and all of the equity markets (initially all developed markets and subsequently some emerging markets as well). What I brought to the task was familiarity with European equities and global equities, sales and trading, but also my knowledge of Japanese intuitions, how they operate and how they work internally. I also had a personal interest in emerging markets, having done a Masters in European Political Economy shortly before joining DIAM. So I had a side-interest in the Central and Eastern European emerging markets, and also some knowledge of emerging Asia.
HoT: I see you’re fluent in a number of languages including Japanese. What advantage does this give you?
AV: It means I can communicate more closely with our colleagues in our Tokyo office, whom we speak to on an almost day-to-day basis. We also have colleagues based in headquarters but working with us for shorter or longer periods of time as well, so it also helps to be able to make people feel at home when they first arrive in London. However, the language is just the tip of the iceberg, what lies below the waterline here is the Japanese corporate culture and the Japanese culture as a whole. Having lived in Japan for six and a half years, and being able to speak the language, I am not only able to communicate more easily in an immediate sense, but also to understand better where people on the other side might be coming from.
HoT: Can you tell us something about the trading strategies at DIAM at the moment?
AV: DIAM is a large asset manager focused, here in London and across our global office network, on the institutional end of the market. We also service the retail market in Japan, but at DIAM International we focus on large institutions i.e. pension funds, sovereign wealth funds, endowments etc, with whom we develop very close relationships and who tend to have a longer term approach to investing. Our trading strategy is therefore very much tailored to their needs and what we offer as a firm is a bespoke client service. There is a high degree of customisation in what we do to make sure every client has their portfolio managed in the way they want it to be managed. We put a lot of emphasis on our clients’ compliance and fiduciary duties as well, and we make sure that we help them in the best possible way to achieve their objectives and to fulfil their duties. As an example, if a client does not wish to invest in tobacco stocks, we have multiple layers of controls internally from the portfolio construction to the trading level to make sure that their wishes are carried out.
HoT: What are your memories of the 2008 crash? What lessons do you think have been learned from that event?
AV: 2008 was interesting for us as a specialist Japanese asset manager. The crisis originated in the United States in the subprime mortgage market, so, at first, there may have been a feeling that Japan would be reasonably well insulated from the crash. There had already been a fair bit of balance sheet repair in the private sector in Japan in the years leading up to the 2008 crash, because the Japanese economy works on a slightly different cycle and a lot of the balance sheet problems there occurred in the 90’s and early 2000’s. However, as the crisis progressed and deepened, it became obvious that Japan had a lot of operational leverage as an economy and a lot of trading linkages throughout Asia and the global economy that meant that, at the macro level, Japan was profoundly impacted by the 2008 crash. We were in no way insulated from what was happening around us, and that highlighted for us the close linkages in the global economy. Another legacy from 2008 is that counterparty risk came to the forefront of everyone’s attention, and market participants are now a lot more aware of counterparty risk and a lot more proactive in managing it.
HoT: How are you being affected by new regulations?
AV: Regulation is a very hot topic in the City at the moment. Best execution has been around a while as a requirement, and in any case we want to do the best for our client because this is how we are successful as a business. In principle, what the regulator requires of us as a trading desk is also what is required from us from a business point of view as well, so there’s a fundamental alignment. What I feel is changing somewhat with the increased amount of regulation is the increase in the amount of evidencing of what we do that is now required. We have to make sure that we do right by our client, but we also need to make sure that the processes by which we have done that, every step we take along the way, is properly documented in an accessible way, so people can trace back our steps and verify our processes and be satisfied by them. That includes clients and regulators. From a wider perspective as a global firm, we need to make sure that in each of our locations we are fully compliant with the local regulations, but that we also continue to have an integrated view of how we serve our clients well and how we are successful as a global business. We are constantly in dialogue, especially with our parent company in Tokyo, and we are at the forefront of deepening their understanding of the regulatory environment outside Japan.
HoT: What involvement do you personally have in technology procurement?
AV: A lot of involvement is the short answer. We work very closely here with the senior management at DIAM International in making decisions about what technology we need around trading and best execution. As a firm, we have made a lot of investment in the last seven years in ensuring that our technology remains up to date and is able to support us in delivering our objectives for our clients. The benefits of a tightly knit team, which is what we have here, is that we don’t have too many layers of internal communications; we’re quite close to the decision making point so that helps, and we can have very close contact and cooperation.
HoT: Would you like to make a brief comment on any specific difficulties faced by women in the City?
Every employer I have worked with has had its particular approach to diversity in the work place, both at the policy level and at the practical implementation level. I am well aware of the debate about equality in the City and I am sure there is still some way to go in this regard. However for me personally, in my role at DIAM, I have actually always felt supported in finding the right balance, which has enabled me to continue to develop professionally, and in turn make my contribution to the firm’s success. So I feel that there must be lots of positive stories at the micro level of individuals and companies making it work in a mutually beneficial way.
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