How would you think about your final fortnight earlier than retirement? An orderly handover, maybe, with time to place your ft up. Sadly for Toby Baker, head of international alternate buying and selling at T Rowe Worth, US president Donald Trump had different plans.
Baker retires on the finish of March after 25 years on T Rowe’s FX desk and 4 a long time within the trade – stepping away at one of many extra chaotic moments in international markets. However throughout his time on the purchase aspect he has traded by way of all of them: the worldwide monetary disaster, the eurozone sovereign debt disaster, the Swiss Nationwide Financial institution’s de-peg in 2015, the Covid pandemic and Russia’s invasion of Ukraine.
“The market’s all the time going to be up or down, however from a buying and selling perspective it does really feel the fitting time to be leaving,” Baker says. “It’s additionally good to be leaving in a busy market realizing the crew right here goes to take what we’ve been engaged on forwards.”
What additionally reassures him is that he’s leaving FX at some extent the place, as he places it, “it’s essentially the most environment friendly it’s ever been” – definitely a far cry from the times when merchants needed to write purchase on blue tickets and promote on pink tickets.
“Once I began, we needed to cope with a whole bunch of pink and blue tickets that had been manually crammed in by PMs, traded after which manually learn over all of the account splits. Extremely inefficient,” he says. “The buying and selling was tremendous, however it was the reserving of the tickets that wanted to alter.”
Hedge funds can typically commerce on something with anybody – that’s finally the place I’d like to see the actual cash purchase aspect get to
The arrival of digital buying and selling platforms from 2001 onwards was, he says, “a defining second” for making the FX market a lot extra environment friendly. That shift in direction of automation has fuelled a lot of Baker’s personal work at T Rowe.
At an FX Markets Europe occasion in 2024, he described FX choices workflows as being “prefer it’s written on the again of a cigarette packet”. To deal with this, the asset supervisor partnered with execution administration system vendor Portware in 2025 to commerce FX choices on Digital Vega’s multi-dealer platform, a transfer Baker mentioned on the time would cut back operational danger and enhance efficiency.
It’s due to this transfer in direction of automation that Baker feels he’s leaving the trade ready of power – one the place market construction has held up even underneath excessive stress.
“The truth that we’ve gone by way of immense geopolitical danger the place, traditionally, it could have been sufficient to trigger extreme kinks available in the market construction – the truth that we haven’t had that exhibits each purchase aspect and promote aspect are capable of trip out these excessive volatility strikes,” he says.
Evolving skillsets
Towards this backdrop, Baker notes that the function of a buy-side dealer in 2026 appears to be like very completely different from when he started his profession. Coding expertise typically take priority over voice buying and selling, he says, however realizing Python doesn’t make you an excellent dealer – what issues is pondering strategically about execution.
That might imply constructing automated instruments to make day-to-day buying and selling extra environment friendly, or realizing when to execute a danger switch over voice moderately than with an algo.
Transaction value evaluation (TCA) instruments have made the most important distinction to how buy-side desks execute, he says. Submit-trade TCA has enabled these desks not solely to scrutinise the costs they obtain from sellers, but in addition to work with portfolio managers to enhance execution processes.
“Submit-trade TCA has given us the power to actually analyse how we commerce and to make use of statistics to get a greater consequence. Going into the trades, there must be no extra surprises,” he says.
Selecting long-term influence over fast wins isn’t straightforward, however it’s the one strategy to construct one thing that lasts on your shoppers and on your personal legacy
Resolution-making on the desk is now extra data-driven than ever, Baker says. His crew has the data to know when to ask a single supplier for a direct worth moderately than working 10 to fifteen banks in competitors, which reduces info leakage and improves effectivity. That mentioned, he notes there’s nonetheless a spot for aggressive requests-for-quotes (RFQs).
“There isn’t a proper method or mistaken method of buying and selling, simply completely different outcomes. And if you’re statistically getting worse outcomes, then it’s essential to change the way in which you’re buying and selling,” he says.
Synthetic intelligence may push this additional. Baker sees a future the place a dealer may ask an agentic AI mannequin which financial institution algo to make use of or which sellers to strategy for a danger switch worth.
“That’s the place it will go, however you continue to want somebody to sanity-check it,” he says.
One other talent he sees changing into extra vital for the purchase aspect is commerce concept era. Prior to now, this was usually the protect of portfolio managers and strategists, however Baker argues that merchants who work together with banks and platforms every day are in a really perfect place to provide you with their very own concepts.
“The merchants are the closest to the Road, and if the Road offers us good concepts, hopefully we are able to put a few of these in entrance of the decision-makers to place them into motion,” he says.
Frustrations
What has not modified – a lot to Baker’s frustration – is the credit score infrastructure that constrains how asset managers entry the market. In contrast to hedge funds, which use a international alternate prime dealer (FXPB) to commerce with the broader market, asset managers face restrictions on which counterparties they will cope with, together with non-bank market-makers, and capability limits when coping with a single financial institution. It additionally requires negotiations of credit score assist annex documentation and onboarding with particular person sellers, introducing vital friction when wanting to make use of a brand new financial institution.
“An actual ache level for the market, at the very least for the actual cash group, has been for us to cope with who we wish,” Baker says.
“Hedge funds can typically commerce on something with anybody – that’s finally the place I’d like to see the actual cash purchase aspect get to. If we are able to discover higher options for credit score intermediation, then I believe it is going to assist the trade rather a lot.”
Baker additionally emphasises the significance of the relationships his crew has constructed with its financial institution counterparties which have helped his crew get by way of most of the market crises through the years.
He recollects Russia’s invasion of Ukraine in 2022 as a key second when T Rowe leaned on the trusted relationships it had established with its sellers to handle its danger.
“We, for years, have tried to foster good relationships, which suggests in unstable occasions the pricing ought to stay comparatively secure. They know we’re not going to run them over, and likewise, in the event that they run us over, then conversations shall be had,” he explains.
Baker says this “tradition of belief” he has cultivated through the years offers him confidence that the desk will keep on successfully as soon as he departs. He additionally notes that sell-side information of the actual cash group is “pretty much as good because it’s ever been”, partly as a result of many senior salespeople on the banks are former junior merchants on the purchase aspect.
However he acknowledges that value pressures on the promote aspect means protection for actual cash shoppers will not be what it was.
“There’s rather a lot much less gross sales folks overlaying extra shoppers, so it relies upon the way you’re rated or tiered by these gross sales folks. I’d say that T Rowe is top-tiered, so I really feel like we get actually good protection. In case you are not, then sadly, you’re most likely extra e-priced moderately than bank-priced, and that may make a distinction,” he says.
As soon as Baker hangs up his gloves on the finish of March, his rapid plans embrace travelling and attending the Fifa World Cup this summer time along with his son. He says he’ll keep concerned within the FX trade in some capability and can pop up at numerous conferences.
Within the meantime, he leaves behind some recommendation for the subsequent era of merchants. The primary is to take heed to these round you and discover a mentor – somebody you possibly can ask “the dumb questions”, as he places it. That is the one strategy to successfully have interaction and study one thing, he says.
The second is to construct with a three-year roadmap in thoughts, whether or not that could be a new instrument on the desk or a counterparty relationship.
“Selecting long-term influence over fast wins isn’t straightforward, however it’s the one strategy to construct one thing that lasts on your shoppers and on your personal legacy,” he says.
Enhancing by Lukas Becker
