Fewer executives left to compete on their own will end up shrinking the competition. According to Brad Smith, head of credit and retirement solutions, the coming markets will put people to work faster, with less disruption.
“After hours transactions will be seamless,” he said.
About 300,000 people had moved to Morningstar by mid-September, and according to Clark, more people could start leaving the firms’ platforms at that time.
That gives Morningstar a bigger pool of potential movers. “We can end up with a lot of busy people at us. I think that can help our platform go much faster. The net result is, after hours, people are going to have more ability to accomplish more transactions. After-hours transactions will happen more quickly,” Clark said.
Ray Henry, global leader of multi-asset solutions at Willis Towers Watson, said about 42% of the firm’s clients have moved money to Morningstar by the end of last year.
Another 37% moved to other platforms, he said.
If some of Morningstar’s competitors aren’t around by mid-September, it will be helpful, he said. “I think if they’re not there, the people will move on to more friendly organizations. As they have more opportunities and they’ve seen their experience working with other companies work, they’ll move more often,” Henry said.
Lately, the shifts in the market have made it difficult for companies to leave after-hours trading. In the wake of the financial crisis, financial firms were leaving the markets in droves. “There was a wave of liquidity at the end of last year. It pushed away institutions that wanted to get in the market to make a liquidity event. Or for strategic reasons,” Henry said.
At the end of last year, about 5,600 employees had moved assets to Morningstar, and Henry said he expected that number to grow in 2018.
“The market is getting easier for people to do what they want to do, and that is to buy what they want,” he said.
Morningstar has been testing after-hours trading since early this year. Employees are given a code to access the platform from 7 p.m. to 10 p.m. Eastern. The platform is meant for technology and financial professionals who work outside of the day.
“We’re not looking to use after-hours trading as a tool to get revenues,” Clark said.
And while it would not directly influence their revenues, he acknowledged the shift would affect their bottom line. “It’s not just about the platform. This is about having staff members who are going to have more time to do other things,” he said.
Morningstar is looking to avoid layoffs. About 300 people are based at Morningstar’s headquarters, and those people will continue to have access to the platform during the after-hours hours.
Experts say this is a good sign for the technology industry. “The ability to move with greater speed is a mark of how fast technology is moving,” said Rob Moir, managing director and co-founder of NextGen Financial Technology.
While the technology industry
ecause the money that’s coming into the market is much bigger than it’s going out, so it’s a good thing to make sure we can move the business forward in a way that makes the world better, faster and more transparent, he said.
“To me, the best opportunity to do that is to invest in the platform, invest in staff. Then work at the day-to-day level to find the efficiencies and manage the business in the best way,” Moir said.
The hours may work for Clark, but how will Morningstar’s clients react?
According to Clark, many clients have not accepted the new market changes. But he is optimistic. “I think people understand after-hours trading, and they may have been upset before. But now I think they understand that it’s better for the business,” Clark said.
Clark does not expect the new services to affect clients’ revenues, but he said he would rather have movers and movers than spend too much time trying to fill empty seats. “It makes more sense to be on our platform than trying to find people at another place,” Clark said.
For Henry, the new platform was about valuing employees and getting access to more top talent.
“Now we’re seeing the value of the time of the employees and the value of the technology. After you’ve been in the space and seen how these services have worked, it’s easier to make the commitment,” he said.
Henry said he’d have more information about after-hours trading for the entire company next week. “I think what happens in 2018, we will be more nuanced and more thoughtful about what we do. We will look at market conditions. We will look at things like volatility and try to make changes when necessary,” Henry said.
When Morningstar decided to abandon its trading desk, the decision came after months of deliberation. And while the movers and shakers at the investment company will still be able to move assets in and out, they will no longer have access to the so-called magic hours of the day.
“They’re trying to create the investment market that we have today in the best way possible. The best thing about that is they’re valuing their employees and employees in a different way, ” Morningstar Director of Marketing and Communications Casey Clark said.