Wall Street bond traders may soon be immortalized in the fashion of baseball legends Honus Wagner, Willie Mays and Pete Rose if a plan by a former Goldman Sachs Group Inc. executive takes off.
That’s right, baseball cards are coming to finance.
The brainchild of Chris White, founder of bond trading and analytics firm BondCliQ, the digital cards reflect a new statistical approach to measure the effectiveness of individual traders and salespeople on dealer bond desks. White brought in as an investor Paul DePodesta, who used novel statistical methods to elevate the Oakland Athletics baseball team to a title contender, a story captured in the Michael Lewis book “Moneyball.”
The bond market has historically leaned on one metric for success -- did a trader make money? BondCliQ wants to shed some light on whether rainmakers are good or lucky. It is collecting data that can allow buyers such as hedge funds or other institutional investors to identify the best dealer traders in a given sector or security. And dealers can see how they rank among competitors. Presumably, traders who top the list year after year could use the stats to argue for better pay.
“Here we are in a market where data is king, but we have very little information on who is qualified,” White, the firm’s chief executive officer, said in an interview. “The buy side wants to know who they should engage. The dealers want an opportunity to show why it should be them.”
The data will include market sector, average maturity of debt bought and sold and the number of quotes provided, according to a mock card provided by White. The firm will also calculate stats called specialist percentage and market-maker percentage.
The specialist percentage is “when you make a price that’s normally the best price in the market,” White said. The market-maker stat denotes traders who “are the market,” he said. The end goal is to create better bond prices by putting both individual and bank reputations on the line.
The effort comes as the market is bigger and perhaps riskier than it’s ever been. U.S. investment-grade companies have sold more than $1 trillion in new corporate debt in each of the last eight years -- and the fastest pace was set in 2020, when the mark was reached in May.
BondCliQ is creating a system to collect, maintain and publish stats on bond traders and salespeople by bank. It has 34 dealers that voluntarily provide pricing data, White said. The firm supplements that with some public information such as Trace-reported deal size and price to derive the stats.
White was at Goldman Sachs from 2010 to 2015, where he created GSessions, a bond-trading system that has since been shut down. He’s also CEO of advisory firm ViableMkts LLC.