Each weekday morning, Moran Forman wakes up in her Chelsea apartment, takes a few steps to a spare bedroom and powers up the full might of Goldman Sachs on a curved LCD screen.
Forman, a 33-year old managing director who runs a team of seven traders dealing in equity index derivatives, says technology allows her to feel so connected to her coworkers and clients, she rarely misses being at Goldman’s headquarters a few miles to the 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 phone interview. “It’s been amazing to see how much productivity has potentially even gone up during this period while everybody’s still separated.”
For decades, Wall Street has been a place rooted in vast physical rooms filled with tightly-packed rows of monitors, specialized phones called turrets and workstations operated (mostly) by men between the ages of 22 and 45. This culture survived every calamity, manmade and otherwise, to happen to institutional trading in the last 20 years: The shift to decimalization in stocks; the 9/11 attacks, the financial crisis, the rise of passive investing and Hurricane Sandy.
But now, after the coronavirus pandemic forced traders to work from home, Wall Street has gone virtual, setting off a cultural shift that is only beginning to be understood. As weeks at home stretch into months and traders get habituated to new tech platforms to stay connected, it’s likely that Wall Street – which never before allowed traders to operate away from the floor – will be permanently changed by the coronavirus, according to traders, bank executives and the CEOs of tech vendors used by banks.
She leans on Symphony, a messaging platform for investment banks similar to Slack, to create chatrooms for internal teams and clients, and Zoom to host teleconference calls with Goldman traders and clients. On any given day, she has 50 chats open with hedge funds, asset managers and pensions seeking advice on the intricacies of placing huge trades, usually to hedge against losses or wager on volatility.
With all these workplace tools at her disposal, including a Goldman-issued Cisco phone that records conversations and lets her reach contacts at the press of a button, Forman said the transition has been easier than she would’ve imagined. It doesn’t matter that colleagues are spread around the country, working from homes in Atlanta and Florida, as well as Goldman offices in Jersey City and Greenwich, Connecticut.
Working remotely is built into a lot of modern companies, says GGV’s Jeff Richards
“Before you would’ve walked across the trading floor to communicate, and you kind of assumed that everyone knew what was happening because there was this assumption of knowledge transference that happens on the floor,” Forman said. “You’re now forced to be more systematic and efficient about communicating.”
While companies have been investing in digital tools like Symphony for the past few years to keep up with a younger workforce used to excellent consumer technology, it’s only now, amid the pandemic, that they have become crucial, said Ying Cao, director of digital strategy for London-based investment bank Barclays
“People were using it before, but you also had face-to-face,” Cao said. “With a very distributed workspace, it’s important to have a group of people in a single chat room who can see each other typing and share information in real time, rather than sending an email and you don’t know when that person will reply.”
The implications for remote work will be lasting, Cao said: “Once you are at home and you realize it’s so easy to conduct business, you don’t want to commute two hours a day just to have conversations with people.”
Exhibit A for how the new Wall Street is operating 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 surge in stock volatility and dislocations across credit markets. IT departments worked around the clock to equip thousands of traders for the task. But the five biggest U.S. investment banks posted their best trading quarter in nearly a decade as both bond and stock desks handily beat expectations.
Morgan Stanley CEO James Gorman marveled at the results, which coincided with ten of the highest-volume days for stocks on record.
“If you told me three months ago we could have 90% of employees out of the office and be functioning with the volumes we have had,” Gorman said in an CNBC interview, “I would’ve said the probability of that being pulled off is close to zero, but it happened.”
Reopening Wall Street
Now, as the discussion turns to when New York — the global epicenter of the coronavirus pandemic seeing a decline in coronavirus deaths in recent weeks — can begin to reopen, banks are beginning to plan for the return of workers.
It won’t be business as usual. Banks could bring back up to half of their staff, but doing more than that will be hard as employees still need to maintain distance from each other.
Firms including Morgan Stanley are looking at keeping workers masked and leaving every other seat empty, and have even considered setting up plastic partitions between desks. Goldman is looking at installing infrared body scanners at building entrances, and banks including Citigroup and JPMorgan Chase are figuring out how to keep lobbies and elevators from becoming focal points of contagion.
“Some portion of our workforce won’t need to come back to the office on a full-time basis anymore,” said Bob Santella, CEO of IPC Systems, the leading maker of trading turrets for Wall Street. “There will be pressure to space people further at the office, and my expectation is that’s going to be offset by a larger percentage of people working from home that weren’t doing it.”
This intermediate period could last 12 months or longer, Santella said, meaning that people will continue to rely on tech platforms rather than face-to-face contact. Since the coronavirus pandemic took hold, IPC has sold more than 10,000 licenses for “soft turrets” – cloud based telephones for remote work – or six to seven times more than in the past year.
H/O: David Gurle, Symphony
David Gurle, CEO, Symphony
“People have become dependent on Symphony for their daily activities,” Symphony CEO David Gurle said in interview. “It’s an essential element of their business going forward because they don’t think this is a one-off event, they realize that pandemics could be the new reality.”
The Palo Alto, California-based start-up said that from January to March, message traffic on the network jumped 273% while daily active users rose 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 over 500 hedge funds with a combined $750 billion in assets under management. Even more than banks, hedge funds are likely to adopt a post-coronavirus model where workers don’t 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 hedge fund in Minnesota, nobody’s working from the office anymore,” Grandi said.
It hasn’t gone perfectly smoothly, however. Financial services has been deemed 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 trading executives at both of the banks have pressured staff on certain teams to come in, even as workers fell ill, according to multiple media reports.
There has always been value to having traders under one roof, after all. Transactions often take longer now as people wait for responses that used to be more immediate in person. A high yield trader who spots a dislocation in the debt of a company could tip off a nearby equity trader about a shorting opportunity, for instance. Mentoring junior traders will always be easier face to face.
But now, artificial intelligence bots can fill in the gaps created by remote work, said David Donovan, who spent 25 years in equity trading before joining Publicis Sapient as a consultant. For instance, a program could automatically alert traders about momentary trading opportunities in the same way that colleagues used to, he said.
Wall Street remains a bastion of men, particularly at the senior levels, and Goldman’s Forman hopes that the ability to work from home will help address that. While banks have been hiring more women and minorities out of school, these people may stay in the industry longer if it evolves past the rules of the old trading floor.
Despite the advantages of working from home, Forman does admit to missing one aspect of the old Wall Street: There is a palpable buzz in the air of a trading floor at the start of trading at 9:30 a.m. as phones ring and conversations spike.
“Now, the difference between 9:28 a.m. and 9:32 a.m. is really nothing, you have to just kind of look at your screen and be like, ‘Right, yeah, we opened’,” Forman said. “I keep CNBC on just to remind myself about the flow of the day.”