Traders Magazine spoke with Michael Warlan, Head of Global Trading at Third Avenue Management, who won Excellence in Equities Trading at the 2023 Markets Choice Awards.
Briefly describe your background and career to date.
I started my career working for the affiliated broker-dealer of Third Avenue Management called MJ Whitman. Here I supported the Institutional Sales desk. This was at a time when Third Avenue and MJ Whitman were growing the Investment Advisor and Fund business rapidly. A short time later there was opportunity for me to fill a role on the equity trading desk, and with the evolution of our firm I was able to lead efforts to expand our trading across multiple geographies and into different asset classes. I also spearheaded technology initiatives, handling multiple OMS implementations. After a few years I took a leadership role over the desk and have been here ever since.
What have been the main drivers of your success?
In the early part of my career, I was fortunate to be exposed to many facets of the firm and a business that was growing. I think a key driver to my success was the opportunities provided during that period. When I started we were still trading over the phone, using floor brokers, and handwriting blotters or tickets. Then, in the late 1990’s we saw an increase in the adoption of technology for not only trading, but also the integration of technology to help manage order flow and execution strategy. Looking back, I can say that we have all become much more efficient with the use of technology for trading. Nevertheless, the early experience of voice or manual trading was invaluable.
For you personally, what’s your greatest achievement?
Personally, it would have to be my daughter. Professionally, I would say my eagerness to learn and continuously question everything have significantly contributed to my longevity with the firm. As my 25th anniversary with the firm approaches this summer, it is an opportune time to look back on all that I have accomplished at Third Avenue Management, and I look forward to many more years with the firm.
Please tell us about Third Avenue Management and your current initiatives.
Third Avenue Management follows a fundamental, value style of investing. We offer equity-based strategies that focus on Global Value, Small-Cap Value, Global and International Real Estate Value. Like many active managers we are pleased to see a shift back to active management after many years of investor preference for low-cost passive strategies. With the growth of ETF vehicles, we are exploring active ETFs as well as other vehicles to deploy our current strategies where we see potential demand. We have also been developing new strategies with the separately managed account universe in mind.
What trends do you see around buy-side equity trading?
This has been a particularly active last 12 months from the regulators in terms of rules proposals, so I would say that conversations have focused on dealing with the handful that are on the table. One theme in particular that has stood out in US markets is the auction, as well as other intraday auction strategies. While the new proposed rule on auctions wasn’t the genesis for continuous cross or intra-day auction, it certainly seems to be much more relevant now that the regulators have formally introduced the topic.
How do you innovate, streamline and advance electronic trading at Third Avenue Management?
As electronic trading and broker offerings are entering a mature phase, at least in the US, it has become more important to focus on strategies and firms that fit your style of trading. Some desks prefer to use internal resources to customize broker strategies, but I have found working with those brokers open to customization an easier and more efficient approach.
How are innovative technologies shifting behaviors within equity markets?
AI, there I said it – it’s hard to escape the effects or at least the conversation around Artificial Intelligence. While the principles supporting AI or machine learning have been around for some time, the conversation has exploded with the roll out of Chat GPT and other open platforms. This has worked its way into many of the conversations we are having, including but not limited to trading. Just as we saw the shift towards electronification, this next new innovation is already having an impact on market structure and will certainly play a bigger role across the industry for years to come.
