Quick Takes Plus: "Wait, what do you do again?" With guest Ian Barnes
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Ali Curi: Hi everyone, and welcome to ION Markets, Quick Takes Plus. I'm Ali Curi and our host Chris Barnes, will take a quick dive into topics of importance in the financial and FinTech world. Today's special guest is Ian Barnes, who heads the UK division of a boutique US asset management firm. He has over 15 years of experience leading boutique firms and a background in consultancy.
Let's get started. Hi Chris. Hi Ian.
Chris Barnes: Hey Ali. How you doing?
Ian Barnes: Hey, Ali.
Ali Curi: Gentlemen, welcome to Quick Takes Plus. Now, Chris, I noticed you both have the same last name. Is that a happy coincidence or is there a bigger story here?
Chris Barnes: Nope. There is a bigger story. I'm not sure how important this is to the broader world of finance, but Ian Barnes, thank you very much for being here.
Ian is my elder brother. And whenever I speak to him, whenever I speak to my family in general, actually, I find it incredible that I've been doing this job for well over 20 years. And yet I still can't describe to them what I actually do, and specifically Ian. Ian works in the actual financial industry.
So whilst we do have a lot of jargon associated with our jobs, I thought of all of my family members that should actually understand what I do, it's Ian. So thank you again for joining us. Do you wanna give us a quick introduction to yourself and then maybe we can talk about what I actually do as a job?
Ian Barnes: Hey Chris. Yeah, I'm very happy to be here and I guess the first thing to say is just for the listeners, because we are constantly told that whilst we look nothing like each other at all, we do sound quite a lot the same. So in case they think that you've turned schizophrenic and are having a conversation with yourself, this is me now and Chris, just compare and contrast.
Chris Barnes: And this is me now and all of our listeners are now wondering, so, who got the looks and who got the brains.
Ian Barnes: Well, you'll definitely be able to find out about the brains by the end of this podcast, Chris. And how proud are our parents right now with us actually doing something together if they knew, of course, what a podcast was. By way of introduction, so yeah, I'm the older brother, I've been working in a finance for over 30 years now, actually. But as Ali said, the last 15, working in asset management where I've been running the operations of asset management firms in the UK and Europe. It's quite easy for me to understand what role asset managers play in the financial industry because at the end of the day, my clients are pension schemes and endowments and foundations, and we invest their assets in order to grow them in real terms over the long term.
And the reason why we do that is that they have to pay pensions, they have to fund medical research or pay educational scholarships. And the present value of those would be very, very high unless we could actually grow those assets in real terms over the long term. So we invest in businesses that are gonna grow, that we hope will grow, that will be very much larger five or 10 years from now, and we pass that value onto our clients. So everyone's a winner.
The businesses that we invest in are getting bigger. Their clients are getting happier because they're managing to sell more stuff. We as shareholders are getting more wealthy. We pass that on to our clients who are pensioners and they're happy. I find it really hard to understand the equivalent of that in your world, Chris, so maybe that's a good place to start.
Just help me understand what it is you do and the value that you bring if that's not too rude a question.
Chris Barnes: No, no, no, it's perfectly valid. And maybe I will start with the value piece first because I think when somebody introduces themselves as a trader, the perception is that all you're doing is hitting a red button for sale, a green button for buy, and you are just trying to extract money from numbers which are moving around.
I should stress, I've tried that type of trading. I wasn't very good at it. I have a huge amount of respect for people who can trade markets like that, but the type of trading that I was always involved in is not that kind of prop trading. It's far more flow trading, and flow trading is really facilitating the movement of capital through markets for clients.
For my specific use case, I had clients who were trying to raise funds, who were trying to issue bonds so that they could build a bridge so that they could build a road and they might just not have a mature enough capital markets in their own domestic market to be able to raise enough capital to actually be able to fund that bridge.
And so what I would do as a trader, is help facilitate the most efficient raising of that capital. Yes, it normally meant that I was facilitating the cheapest way. You can also act as a way of saying it would help you to diversify into different currencies so that you've got access to more of the capital markets.
You've got more of a global investor base, and that really facilitates the ability to do more projects. That's very much on the public finance side. The same thing applies for any of the corporations as well.
Ian Barnes: What you're saying is that, that your clients often don't have a pure profit motivation. It's actually some sort of activity happening in the real world, and you are actually facilitating that as opposed to simply just trying to host some numbers into the black.
Chris Barnes: Precisely that. When I talk about flow trading, I mean that there is a real client, a real human being, a real person at the end of that trade, really. And so, particularly for the type of trading I was doing, which in case anybody's forgotten was cross currency swaps. That was always, you know, voice to voice.
There was always interaction with the client. And so every trade had a story really. And so there is a big human element to the job.
Ian Barnes: So that really surprises me. I've listened to this podcast a few times, and I know how excited you were when you kicked this off with Ali and you. You sent it around to the family and we all tried to listen and I dip into it occasionally, since that point. I have to say, it's pretty esoteric, right? The stuff that you get into is very narrow and very, very deep. And I suppose hearing that actually the... the foundation of that knowledge base really comes from a trading function that has a human element. It's really a surprise because it appears that now the stuff you do is super, super technical.
Has your skillset moved over time? Has the industry changed since you started working on those cross-currency desks? What's the difference now?
Chris Barnes: Yeah, for kind of the evolution, day one. Of trading and this might be specific to rates, but I'm not sure it is really, this is my maybe Finance 101, really.
I was sat down and somebody told me, look, if you can present value, a series of cash flows, then you can trade them. And to a massive extent, it doesn't even matter if you know what the cash flows are. To a huge extent, if you're trading options, it doesn't matter if you know whether the cash flows are going to happen or not.
The whole system is based on what is the present value of cash flows. And what I traded was so pivotal to that. Because it allowed people to trade longer dated products, which would give you more reassurance that your present value calculations of ever longer dated cash flows was more and more accurate.
And so that is where that kind of element of, "What are you doing?" really comes in. Now, how you put the macro picture over that, what causes a 30-year swap to go up or down? That is a different question. I think as we've talked about in it, it does sometimes blow my mind that I have no training in economics. I have no training in finance. I entered the training floor as an engineer. As a scientist, really. And yet you pick up these concepts very, very quickly and that is a key element of the role as well. Is the ability to pick up concepts very, very quickly, 'cause the markets are always changing.
Ian Barnes: And so you mentioned earlier that the other type of trading, which is the red and green button working for a prop desk, you are not very good at that.
What is the difference in the skillset and why do you think you've been able to develop it on the path that you decided to go down?
Chris Barnes: For me, I found I was more suited on the flow side, and I think this is why I end up on blogs and podcasts because for the flow side, I found communication so, so important.
That is really like what I would say the number one skill you have to have. You need to be able to communicate about very technical topics, very niche topic. For example, here, to make it accessible to people who don't trade these things on a day-to-day basis, who maybe look at swaps like once a year. And you need to be able to communicate very clearly, very concisely.
It has to be very clear whether you are saying yes or no. You cannot operate in the gray in a trading environment. You have to know if the trade is done or if the trade is going to happen. And that skillset of communication, I found my real strength on the trading floor and is somewhat what I still do today.
My wife thinks that I'm essentially a translator. I'm a translator of what markets are doing to a broader audience. I'm a translator of what software needs to do to be able to suit the needs of a trader.
Ian Barnes: Honestly, I really am beginning to learn a lot now, and I'm seeing how we are maybe not quite as far apart in the financial industry as I thought, right? I thought that your core skillset was something very, very different to what I've developed in asset management. Just to show you the cororolly of that, so nobody needs an asset manager when you've got a 10 year bull run in equities. When you really need an asset manager is for periods like now, when there's intense volatility in the markets and it's really not clear which direction you are going.
And so one of the core skill sets of any asset manager is not just investing their client's assets, it's actually giving them the narrative. And persuading them to stay invested in the market in order to generate that, a value add over the long term. And it sounds like that very strong communication element runs through both of our roles.
So maybe we're not quite as different as everybody tends to think, Chris.
Chris Barnes: Agreed. And if we're talking about common threads that have run through my career, what I felt is that when I was at HSBC, the cross currency swaps market was really young. It was a fledgling book. It was tiny on the desk. I helped develop that into a really meaningful business.
I left HSBC to set up a new business at State Street trading rates data. I'd never had a rates trading desk before. Secondly, Clarus was a real, real startup FinTech and Swap Agent at LSEG as well. It's been a story of building businesses. What do you see as the common thread over your years in the business?
Ian Barnes: I think it's really, really having the passion for what you are doing, and I know that sounds really, really trite, but there are so many, hundreds of thousands of people in finance that if you really want to be a success, you've gotta love what you do. Because you've got to want to go home at night and tell your partner about it and continue to tell your partner about it, despite the look on their face right? Because it really is by going deep and wanting to know more and do better and feeling a real affinity for your clients, I think that you can drive success. And so it sounds like you've kind of had a very... a common thread there as well in the way that you've driven your career, Chris.
But maybe this feels like a good opportunity actually at the end, just to ask you bit, as you know, you've got a couple of nephews. And one of the nephews is going to be entering the workforce in a couple of years. What tip, what advice would you give him if he wanted to get into a cross currency trading or the part of the industry that you've actually evolved into?
Chris Barnes: I'd say if you want to get into trading, never go into trading with a preconceived idea of what you want to trade.
It was really rewarding for me that I didn't know what an interest rate swap was. I had no I idea and yet to have your eyes opened to how a seemingly really difficult concept to grasp, like, "How do you present value a cash flow when none of the cash flows are known?" To somebody speaks in a central bank and that can change the whole curve and the whole present value of these.
I found that kind of grasp of concepts and complexity, fascinating, and I do think that's been one of the things that's really driven my continued interest in markets over that long period of time is that it is complex and so you shouldn't shy away from something that on day one, feels complex, you should really tackle that challenge head on and go into it knowing that you don't have all of the answers. And so you do have to be very comfortable with ambiguity. I a hundred percent echo what you've said. You have to be passionate about what you do. The passion really leads to longevity as well. And hopefully one day we'll be able to have the nephews on the podcast and we can discuss with them.
Ian Barnes: Sage words of advice. I'm gonna play this to him as a career tool, so let's see what he says and how he does.
Chris Barnes: Well, I should just remind listeners, but the nephew in question, Jake Barnes actually has a published blog on the Clarus website. It's called something like "All You Ever Need to Know About Interest Rate Swaps."
Really embarrassed to say he wrote it when he was 17. And that was our top performing blog of 2022, I think. He managed to wipe the floor with his uncle of 20 years experience. Anyway, on such a happy family note, Ian, I'd just like to say a big, big thank you again. It's been an absolute pleasure to have you as a guest on the podcast.
And maybe we'll do it again one time.
Ian Barnes: Sounds great. It's been an absolute joy and very nice to meet you, Ali, too.
Chris Barnes: Over to you Ali. Thank you.
Ali Curi: Thank you, Chris, and I certainly hope that everyone now understands what you do.
Chris Barnes, Ian Barnes, thank you both for sharing your insights on Quick Takes Plus.
Let's do it again soon.
Chris Barnes: Look forward to it. Thanks, Ali.
Ali Curi: And that's our episode for today. You can follow ION Markets on X and on LinkedIn.
Thank you for joining us.
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Ali Curi: Hi everyone, and welcome to ION Markets, Quick Takes Plus. I'm Ali Curi and our host Chris Barnes, will take a quick dive into topics of importance in the financial and FinTech world. Today's special guest is Ian Barnes, who heads the UK division of a boutique US asset management firm. He has over 15 years of experience leading boutique firms and a background in consultancy.
Let's get started. Hi Chris. Hi Ian.
Chris Barnes: Hey Ali. How you doing?
Ian Barnes: Hey, Ali.
Ali Curi: Gentlemen, welcome to Quick Takes Plus. Now, Chris, I noticed you both have the same last name. Is that a happy coincidence or is there a bigger story here?
Chris Barnes: Nope. There is a bigger story. I'm not sure how important this is to the broader world of finance, but Ian Barnes, thank you very much for being here.
Ian is my elder brother. And whenever I speak to him, whenever I speak to my family in general, actually, I find it incredible that I've been doing this job for well over 20 years. And yet I still can't describe to them what I actually do, and specifically Ian. Ian works in the actual financial industry.
So whilst we do have a lot of jargon associated with our jobs, I thought of all of my family members that should actually understand what I do, it's Ian. So thank you again for joining us. Do you wanna give us a quick introduction to yourself and then maybe we can talk about what I actually do as a job?
Ian Barnes: Hey Chris. Yeah, I'm very happy to be here and I guess the first thing to say is just for the listeners, because we are constantly told that whilst we look nothing like each other at all, we do sound quite a lot the same. So in case they think that you've turned schizophrenic and are having a conversation with yourself, this is me now and Chris, just compare and contrast.
Chris Barnes: And this is me now and all of our listeners are now wondering, so, who got the looks and who got the brains.
Ian Barnes: Well, you'll definitely be able to find out about the brains by the end of this podcast, Chris. And how proud are our parents right now with us actually doing something together if they knew, of course, what a podcast was. By way of introduction, so yeah, I'm the older brother, I've been working in a finance for over 30 years now, actually. But as Ali said, the last 15, working in asset management where I've been running the operations of asset management firms in the UK and Europe. It's quite easy for me to understand what role asset managers play in the financial industry because at the end of the day, my clients are pension schemes and endowments and foundations, and we invest their assets in order to grow them in real terms over the long term.
And the reason why we do that is that they have to pay pensions, they have to fund medical research or pay educational scholarships. And the present value of those would be very, very high unless we could actually grow those assets in real terms over the long term. So we invest in businesses that are gonna grow, that we hope will grow, that will be very much larger five or 10 years from now, and we pass that value onto our clients. So everyone's a winner.
The businesses that we invest in are getting bigger. Their clients are getting happier because they're managing to sell more stuff. We as shareholders are getting more wealthy. We pass that on to our clients who are pensioners and they're happy. I find it really hard to understand the equivalent of that in your world, Chris, so maybe that's a good place to start.
Just help me understand what it is you do and the value that you bring if that's not too rude a question.
Chris Barnes: No, no, no, it's perfectly valid. And maybe I will start with the value piece first because I think when somebody introduces themselves as a trader, the perception is that all you're doing is hitting a red button for sale, a green button for buy, and you are just trying to extract money from numbers which are moving around.
I should stress, I've tried that type of trading. I wasn't very good at it. I have a huge amount of respect for people who can trade markets like that, but the type of trading that I was always involved in is not that kind of prop trading. It's far more flow trading, and flow trading is really facilitating the movement of capital through markets for clients.
For my specific use case, I had clients who were trying to raise funds, who were trying to issue bonds so that they could build a bridge so that they could build a road and they might just not have a mature enough capital markets in their own domestic market to be able to raise enough capital to actually be able to fund that bridge.
And so what I would do as a trader, is help facilitate the most efficient raising of that capital. Yes, it normally meant that I was facilitating the cheapest way. You can also act as a way of saying it would help you to diversify into different currencies so that you've got access to more of the capital markets.
You've got more of a global investor base, and that really facilitates the ability to do more projects. That's very much on the public finance side. The same thing applies for any of the corporations as well.
Ian Barnes: What you're saying is that, that your clients often don't have a pure profit motivation. It's actually some sort of activity happening in the real world, and you are actually facilitating that as opposed to simply just trying to host some numbers into the black.
Chris Barnes: Precisely that. When I talk about flow trading, I mean that there is a real client, a real human being, a real person at the end of that trade, really. And so, particularly for the type of trading I was doing, which in case anybody's forgotten was cross currency swaps. That was always, you know, voice to voice.
There was always interaction with the client. And so every trade had a story really. And so there is a big human element to the job.
Ian Barnes: So that really surprises me. I've listened to this podcast a few times, and I know how excited you were when you kicked this off with Ali and you. You sent it around to the family and we all tried to listen and I dip into it occasionally, since that point. I have to say, it's pretty esoteric, right? The stuff that you get into is very narrow and very, very deep. And I suppose hearing that actually the... the foundation of that knowledge base really comes from a trading function that has a human element. It's really a surprise because it appears that now the stuff you do is super, super technical.
Has your skillset moved over time? Has the industry changed since you started working on those cross-currency desks? What's the difference now?
Chris Barnes: Yeah, for kind of the evolution, day one. Of trading and this might be specific to rates, but I'm not sure it is really, this is my maybe Finance 101, really.
I was sat down and somebody told me, look, if you can present value, a series of cash flows, then you can trade them. And to a massive extent, it doesn't even matter if you know what the cash flows are. To a huge extent, if you're trading options, it doesn't matter if you know whether the cash flows are going to happen or not.
The whole system is based on what is the present value of cash flows. And what I traded was so pivotal to that. Because it allowed people to trade longer dated products, which would give you more reassurance that your present value calculations of ever longer dated cash flows was more and more accurate.
And so that is where that kind of element of, "What are you doing?" really comes in. Now, how you put the macro picture over that, what causes a 30-year swap to go up or down? That is a different question. I think as we've talked about in it, it does sometimes blow my mind that I have no training in economics. I have no training in finance. I entered the training floor as an engineer. As a scientist, really. And yet you pick up these concepts very, very quickly and that is a key element of the role as well. Is the ability to pick up concepts very, very quickly, 'cause the markets are always changing.
Ian Barnes: And so you mentioned earlier that the other type of trading, which is the red and green button working for a prop desk, you are not very good at that.
What is the difference in the skillset and why do you think you've been able to develop it on the path that you decided to go down?
Chris Barnes: For me, I found I was more suited on the flow side, and I think this is why I end up on blogs and podcasts because for the flow side, I found communication so, so important.
That is really like what I would say the number one skill you have to have. You need to be able to communicate about very technical topics, very niche topic. For example, here, to make it accessible to people who don't trade these things on a day-to-day basis, who maybe look at swaps like once a year. And you need to be able to communicate very clearly, very concisely.
It has to be very clear whether you are saying yes or no. You cannot operate in the gray in a trading environment. You have to know if the trade is done or if the trade is going to happen. And that skillset of communication, I found my real strength on the trading floor and is somewhat what I still do today.
My wife thinks that I'm essentially a translator. I'm a translator of what markets are doing to a broader audience. I'm a translator of what software needs to do to be able to suit the needs of a trader.
Ian Barnes: Honestly, I really am beginning to learn a lot now, and I'm seeing how we are maybe not quite as far apart in the financial industry as I thought, right? I thought that your core skillset was something very, very different to what I've developed in asset management. Just to show you the cororolly of that, so nobody needs an asset manager when you've got a 10 year bull run in equities. When you really need an asset manager is for periods like now, when there's intense volatility in the markets and it's really not clear which direction you are going.
And so one of the core skill sets of any asset manager is not just investing their client's assets, it's actually giving them the narrative. And persuading them to stay invested in the market in order to generate that, a value add over the long term. And it sounds like that very strong communication element runs through both of our roles.
So maybe we're not quite as different as everybody tends to think, Chris.
Chris Barnes: Agreed. And if we're talking about common threads that have run through my career, what I felt is that when I was at HSBC, the cross currency swaps market was really young. It was a fledgling book. It was tiny on the desk. I helped develop that into a really meaningful business.
I left HSBC to set up a new business at State Street trading rates data. I'd never had a rates trading desk before. Secondly, Clarus was a real, real startup FinTech and Swap Agent at LSEG as well. It's been a story of building businesses. What do you see as the common thread over your years in the business?
Ian Barnes: I think it's really, really having the passion for what you are doing, and I know that sounds really, really trite, but there are so many, hundreds of thousands of people in finance that if you really want to be a success, you've gotta love what you do. Because you've got to want to go home at night and tell your partner about it and continue to tell your partner about it, despite the look on their face right? Because it really is by going deep and wanting to know more and do better and feeling a real affinity for your clients, I think that you can drive success. And so it sounds like you've kind of had a very... a common thread there as well in the way that you've driven your career, Chris.
But maybe this feels like a good opportunity actually at the end, just to ask you bit, as you know, you've got a couple of nephews. And one of the nephews is going to be entering the workforce in a couple of years. What tip, what advice would you give him if he wanted to get into a cross currency trading or the part of the industry that you've actually evolved into?
Chris Barnes: I'd say if you want to get into trading, never go into trading with a preconceived idea of what you want to trade.
It was really rewarding for me that I didn't know what an interest rate swap was. I had no I idea and yet to have your eyes opened to how a seemingly really difficult concept to grasp, like, "How do you present value a cash flow when none of the cash flows are known?" To somebody speaks in a central bank and that can change the whole curve and the whole present value of these.
I found that kind of grasp of concepts and complexity, fascinating, and I do think that's been one of the things that's really driven my continued interest in markets over that long period of time is that it is complex and so you shouldn't shy away from something that on day one, feels complex, you should really tackle that challenge head on and go into it knowing that you don't have all of the answers. And so you do have to be very comfortable with ambiguity. I a hundred percent echo what you've said. You have to be passionate about what you do. The passion really leads to longevity as well. And hopefully one day we'll be able to have the nephews on the podcast and we can discuss with them.
Ian Barnes: Sage words of advice. I'm gonna play this to him as a career tool, so let's see what he says and how he does.
Chris Barnes: Well, I should just remind listeners, but the nephew in question, Jake Barnes actually has a published blog on the Clarus website. It's called something like "All You Ever Need to Know About Interest Rate Swaps."
Really embarrassed to say he wrote it when he was 17. And that was our top performing blog of 2022, I think. He managed to wipe the floor with his uncle of 20 years experience. Anyway, on such a happy family note, Ian, I'd just like to say a big, big thank you again. It's been an absolute pleasure to have you as a guest on the podcast.
And maybe we'll do it again one time.
Ian Barnes: Sounds great. It's been an absolute joy and very nice to meet you, Ali, too.
Chris Barnes: Over to you Ali. Thank you.
Ali Curi: Thank you, Chris, and I certainly hope that everyone now understands what you do.
Chris Barnes, Ian Barnes, thank you both for sharing your insights on Quick Takes Plus.
Let's do it again soon.
Chris Barnes: Look forward to it. Thanks, Ali.
Ali Curi: And that's our episode for today. You can follow ION Markets on X and on LinkedIn.
Thank you for joining us.
