Darren Gerard is a world renowned expert in the field of inflation derivatives and other inflation products such as TIPS (Treasury Inflation Protected Securities). He is currently serving as the Head of Inflation Products at Tradition Financial Services. He not only provides optimal price execution for the primary dealer market, but also offers advice and thoughtful insight into the market, both on a micro and macro level.
Darren Gerard is an innovator in his field and has been at the center of the inflation markets pick up in volumes. One thing he puts this down to is the advancement and acceptance of technology in the sector. ‘’Previously in the early inception of the market, liquidity was poor and no one wanted to show their hand as it were in the market by offering our market color to the rest of the street. The general fear was that if you wanted to gain exposure to US inflation, by showing a bid out to the rest of the market you would scare off the potential sellers due to the inherent lack of liquidity at the time’’
Fast forward 6 years and the market is buoyant and robust. There is much more generic interest in the market and daily trading volumes have almost quadrupled. The market is regularly featured in the mainstream media as inflation is useful yardstick for measuring the health of the US economy. One of the main reasons for the significant uptick in trading volumes has been the advent of an electronic trading platform, or ‘Volume Matcher’ which effectively allows traders to place their orders at the levels they desire, without the worry of being too aggressive or showing their hands to the rest of the market.
The first electronic trading platform in the market was called Stream Global, a project Mr. Gerard was at the forefront of introducing into generic usage. ‘’We wanted to find an efficient, fair method to increase trading volumes, which also ensured minimal effort and time for the traders to participate.’’ The electronic platforms run typically for 5 minutes, and the mids for the securities are set by the broker. It is not always an easy task to find the right mid, but through Mr. Gerard’s experience in the market, he is able to often successfully find the optimal mid for the market.
One other key part of his day to day function is help new participants come into the market. ‘’I receive calls maybe three times daily on average, asking anything from the composition of an inflation zero coupon swap, to a historical list of trading volumes. Through my prior experience in property derivatives as well as inflation derivatives, I am familiar with the best ways to ease clients into the market and show them the benefits of hedging using our market. ‘’
Mr. Gerard regularly provides commentary that he sends out to the primary dealers and other end users in the market, focusing on trends in the market, price action and specific interests that have occurred that day. He is generally regarded by market participants as the lead innovator and expert in US inflation zero coupon swaps.