Traders usually rise at the crack of dawn.
Sean Dunlea, of Ivy Management Inc. in Boca Raton, Fla., is one trader who gets out of bed when most traders are fast asleep. He arrives at the trading desk around three in the morning. That's because Dunlea, who is 31, trades non-U.S. equities. He is one of Ivy's three international traders.
"We'll trade equities in just about any country," Dunlea said. "We'll trade anything from Eastern European countries to South Africa, Sweden, Denmark, Ireland, the United Kingdom or even India."
Founded in 1960, Ivy Management, a subsidiary of Toronto-based Mackenzie Investment Management Inc. (TSE: MCI), is the manager of the Ivy Funds. Ivy's 18 mutual funds, which are run by four portfolio managers, are primarily international and emerging growth equity funds. The firm has some $3.5 billion in assets and its clients include both individuals and institutions.
Born and raised in Boca Raton, Fla., Dunlea, earned an undergraduate degree in finance from Florida Atlantic University. He also took language courses in German and spent a year studying abroad at Erasmus University in Maastricht, Holland.
Graduating from college in 1993, Dunlea moved to Chicago and landed an internship with the International Trading Institute. He was charged with training traders from overseas on how to trade options in the U.S. markets.
About six months later, Dunlea joined Seliba Partners as an assistant trader at the Chicago Board Options Exchange. Then, in late 1994, it was off to Frankfurt, Germany, where he joined Dresnder Kleinwort Benson (DKB).
He traded equity options at DKB for the next five years. Two years ago, he returned to his hometown of Boca Raton and joined Ivy Management as a seasoned, international trader, who also spoke fluent German.
To Dunlea the challenge of trading foreign stocks is to successfully deal with a market that, unlike the U.S. listed markets, is completely electronic.
For example, he said that what Nasdaq traders are experiencing with the switchover to decimals is something that he has been facing for several years. "The biggest challenge for our traders is to see what's behind the market," Dunlea said. He pointed out that it's difficult for a trader to gauge the breadth of the marketplace when the trader is far away from an actual trading floor where traders are calling out orders.
Dunlea finds he achieves better execution when he places an order directly to an overseas broker dealer's trading desk rather than to the firm's U.S. office. "I can easily call a [broker dealer's] New York office and they can pass it on," he said, "but then we are at the mercy of the broker."
For most U.S. firms handling European stocks, London is the trading base. After receiving the orders in London, they then execute the orders in the respective country. But Dunlea tries, if there is time available, to execute his order in the country where the stock is traded.
"When I have a Swiss, Austrian or German order I sometimes call the trading desk directly," he said. "I get a little better response that way. If you speak their language sometimes you can get things done quicker and get a little bit more attention."
Dunlea's desk draws upon some ten broker dealers. Added value is of utmost importance to Ivy's traders, not value weighted average price, or the VWAP. Dunlea emphasized that what his desk is looking for from a broker dealer is something beyond trading, such as news, order flow or any way to become involved with a stock. Another added value that broker dealers can provide, Dunlea said, is keeping his desk informed on how revised foreign stock index weightings will affect the value of a particular issue.
"There are a lot of [foreign] indexes besides the country indexes," he said. "The 50 big names [in Europe] get re-weighted in their home country, or in the Dow Jones Euro Stoxx 50 Index about once a year. When we see different weightings we want to know how that is going to affect the share price. If we have an order on our plate, we want to react accordingly."
For Dunlea the trading day ends around noontime. He usually heads home, which is only a ten minute drive away, and has lunch and then takes a two or three hour catnap. Then it's off to a workout at the gym.
