JPMorgan learned the hard way that it needed to get its traders away from the floor. As detailed by the Wall Street Journal, a managing director on the bank's New York trading floor contracted the virus in early March and came into work. It quickly became apparent that the bank's traders needed to be sent home, or to back-up sites like its office in Basingstoke. Since mid-June, however, the JPMorgan has been easing its traders back into its main offices. As it does so, it's becoming apparent just what's been lost and what somehow needs to be recreated with COVID contingencies in place.
Speaking at a seminar organized by the Systemic Risk Centre in London, Charles Bristow, a managing director in rates trading at JPM said that what's been missing while traders were at home is "incidental information." This is the information that, "you didn't know you needed," explained Bristow.
In a traditional trading floor set-up, incidental information flows freely. "It's when you hear something a corridor away, or when you hear a word that triggers something in your mind," said Bristow. In a remote working situation, this doesn't happen. It's very easy for people to use digital communication when they know the information they need and are trying to elicit, it's much harder to unearth incidental information you're not even aware of.
As traders return to the office, Bristow said JPM is trying to design its COVID-proofed trading floor with the spread of this kind of incidental information in mind. People who might be able to impart incidental information to particular teams must be located as close by as possible. This is made doubly important by the fact that they are now further apart. - Someone sitting five or 10 desks away is suddenly 40 or 50 feet distant and beyond the "acoustic range." Even when employees are back in the office, incidental information is therefore likely to flow far less freely.
"The queston is who are the hubs that provide the incidental information exchange and how do you scale those hubs to be a team?" said Bristow. Like Citi's Paco Ybarra, he noted too that banks are likely to find that working from home gets harder rather than easier over time. "Time is against us," said Bristow. "The more time drifts, the less people will know each other...The question is how do we maintain the same sense of being a team when people have never been located together."
Like Jim Esposito at Goldman Sachs, Bristow also noted that it's harder to induct and train juniors when you're working remotely. This summer's interns and new analysts will be the first real test of the new system, said Bristow: "If we can't train talent, we won't have a business model for the future." 2020's internships are far more structured than usual, he added: "The usual format of an internship is a lot of rotation, a lot of watching and a lot learning by osbservation. That will not work [under a virtual model.]"
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