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January 31, 2008

Old Dogs, New Tricks: Ray Tierney

Thinking Like Sales Traders is Tierney's Goal at MSIM

By Michael Scotti

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Help Wanted: Global money manager looking for a head trader with sellside experience, knowledge of hedge funds and various asset classes, as well as a strong understanding of technology and quantitative tools needed in an effort to streamline trading processes and lower trading costs at a global organization.

Over the last two years, that could have been an ad for the last handful of top trading jobs at big buyside shops, all of which went to former sellside trading veterans. Ironically, just a half-dozen years ago, these Wall Street pros probably would not have given these jobs a second look.

But that's not the case today. Part of the attraction, says one observer, is that sellside pros are viewing these buyside positions as challenges-they require restructuring entire trading operations, from the processes to the technology. The fact that these jobs are at big institutions that pay well doesn't hurt either, as the spread in pay between the sellside and top buyside jobs has narrowed, he adds.

Brian Conroy, a sellside and hedge fund veteran, began the trend just over two years ago when he joined Fidelity Investments. More recently, Rob Arancio joined Neuberger Berman from Lehman Brothers, where he co-headed liquid markets.

Michael Gitlin, who has global and fixed-income experience, and most recently headed equity sales at Citi, joined T. Rowe Price not long ago in a newly created job to oversee global trading.

Trade-cost analysis pioneer Wayne Wagner says these hires of top managers indicate that the buyside realizes that it needs to do a better job to rein in trading costs with streamlined processes and better technology and analytics. "The institutions have been the laggards in this area," Wagner says. "The hedge funds have been the leaders."

This feature outlines the experiences of two former sellsiders who have taken top buyside jobs: Ray Tierney of Morgan Stanley Investment Management and Keith Gertsen of AllianceBernstein. Both men filled newly created positions and are restructuring their desks around the world.


During his 16 months as global head of equity trading at Morgan Stanley Investment Management, Ray Tierney has instituted a number of initiatives--all in the name of increasing access to liquidity and driving down trading costs. "To me, there is an enormous amount of opportunity that can be captured if we manage [our desk] properly," says Tierney, a 26-year veteran of brokerage sales and distribution, his last 15 at Morgan Stanley.

Tierney, described as "intense" and "high-energy" by colleagues, hasn't wasted time in his transition to the money management division with $265 billion in equities. He has introduced new technology, upgraded systems and streamlined the processes under which the global trading desks operate. That included an upgrade of the LongView order management system, the addition of execution management systems (EMSs) and algorithmic trading, an expansion of the role of trade-cost analysis (TCA) and the introduction of guidelines for best practices. 

A more subtle move has been his quest to change the mindset of those doing the trading at six desks around the globe: New York, Houston, London, Tokyo, Singapore and India. Tierney wants MSIM's traders to act more like sales traders than traditional buyside traders.