Why are there so few women in trading?

by Viki Leibow

Introduction

ESG has become a focal point for organisations as they work towards a more sustainable and equitable future. The S within ESG, which stands for social, is a key element of this future and can have a broad role in corporations. It encompasses the way employees are treated, who the business services, the communities the business impacts, and the supply chain that spreads into the wider economy. A central aspect of the S is Diversity, Equity and Inclusion (DEI). When firms implement tangible DEI practices that support employees through more equitable recruitment, retention, and culture, inclusion in the workplace can improve. However, if a firm only markets DEI publicly and does not have any practical initiatives in place for employees, firms will struggle to improve inclusion. One reason participants in the financial markets trading industry, among many others, are focusing on DEI is due to the disproportionate levels of employee gender representation, especially in senior leadership positions. As of 2020, women fill less than 20% of sales and trading roles in the industry.[1] This disproportionate representation is visible and recognised; trading employees have raised the subject to Sustainable Trading in multiple fora, a recent example is speaker representation on panel discussions at trading conferences being majority, and in some cases, exclusively male.[2] This prompts the obvious question: Why are there so few women in trading? To understand the gender gap in sales and trading roles, we should consider several factors. First, the historic exclusion of women from trading. Second, labour market models and their relation to gender roles, and third, how governance affects gender equality through public and corporate policy.

Historic exclusion

In the UK, women were not allowed on the trading floor of the London Stock Exchange until 1973.[3] The Sex Discrimination Act of 1975[4] and the Race Relations Act of 1975[5] gave employees legal protection from discrimination. However, this caused exclusive attitudes and practices to shift from legally preventing women from participating in trading to exclusion through workplace culture. 50 years is short period of time for women to feel encouraged to become traders, rise to senior leadership positions, receive equal pay, and help the industry to be fully inclusive. Part of the reason for this is cultural norms. For many years, female traders joined a ‘boys club’ of performative masculinity. The phenomenon of performative masculinity occurs when men behave in ways that reject femininity and display forms of dominance over women to be better accepted by other men. This dominance can appear in the form of sexist behaviour, belittling female employees, excluding women from important meetings, and reducing women to their physical appearance. This phenomenon has become so recognised that even films have captured the stereotype of traders and their toxic masculine behaviours. Unfortunately, female traders have shared plenty of experiences about pay discrepancies and poor treatment on the trading floor from the late 1970s until today.[6] Decades of negative experiences of workplace culture and pay inequality are not particularly encouraging for women to join the trading industry, which is why the push towards cultural inclusion and equal pay is so important. The Sustainable Trading DEI Questionnaire Report found that 15 out of 22 trading firms have explicit commitments to the equality of compensation, which is a step in the right direction from a governance perspective.[7] Another aspect of inclusion is often focused on reaching gender parity, however, equality is not as simple as having the same number of men and women in a room. The industry must intentionally focus on cultivating an environment in which female traders are socially and financially respected.

Structural inequality

The structure of the industry also has an impact on the low numbers of women in trading. This structure is not unique to trading but is part of a larger social structure that affects labour market participation. The ‘male breadwinner model’ is a concept that describes how gender roles in society have been structured around the paid labour market.[8] Traditionally, the male breadwinner performs paid labour while the woman performs unpaid domestic labour. It is important to note that women have always worked in the paid labour market, especially women of lower classes, but their opportunities and pay were far less than men. As laws changed and women had more options to engage in paid labour, the social expectations of women to perform unpaid domestic labour continued. This created what is known as ‘time poverty’[9] for many women. They are expected to spend their time at work whilst also undertaking domestic and caretaking labour, which does not give them the same flexibility and bandwidth to perform on par with men at work. Even as society has progressed and men do more unpaid domestic labour than in the past, in 2015 The Office of National Statistics found that women perform 60% more domestic labour than men on average.[10] When women were ‘included’ in the trading industry, an equitable employment structure for the different responsibilities of men and women did not exist. That is why today, options for flexible working are so important to help meet the needs of all employees.

Corporate and public policy

Corporate and public policies have also made an impact on the recruitment and retention of women in the workplace. In the UK in 1992 the Pregnant Workers Directive prevented women from being dismissed from work due to pregnancy.[11] In 1996, the Parental Leave Directive introduced unpaid parental leave,[12] and parental leave policies have continued to advance for over 18 years, including the Children and Families Act of 2014 which covers flexible working, extended and shared parental leave and adoption leave.[13] These protections give employees the opportunity to become parents without repercussions from their employers. However, becoming parents impacts men‘s and women’s work lives quite differently. For example, while shared parental leave helps female employees not bear the full responsibility of childcare, men statistically earn higher incomes than women, so many heterosexual couples choose for women to take the majority of leave.[14] Additionally, the motherhood pay penalty shows that women earn less after having children, while also experiencing an impact on their career progression. A 2019 study by the UK Equalities Office found that the number of full-time employed women dropped to 40% after childbirth, while the number of full-time employed men dropped to 90% after having a child.[15] Family and work-life balance has been reported as one of the largest barriers to achieving gender parity in the finance industry, with maternity leave heavily impacting career progression for women.[14] Part of the solution is through good governance, the trading industry can proactively support mothers by developing a culture and policies that are inclusive and equitable for new parents. Ensuring organisations offer employees flexibility for childcare will help compensate for the limitations of public policy. Sweden’s paid parental leave policy is an example of a successful parental leave dual earner model that can be adopted by corporations, as its inclusion of reserved paternity leave encourages the uptake of men’s caretaking responsibilities and increases women’s participation in the labour market.[16] Sweden has one of the highest rates of female labour market participation in the world at 81% in 2021, compared to the UK at 74%.[17] Corporations can be part of the solution to improve female workforce participation by adopting progressive parental leave policies that are inclusive of new fathers and go above and beyond regional public policies.

Conclusion

Over the last few decades, there have been improvements for women in the trading industry and the labour market as a whole. One example of this progression is the FTSE 350 companies having 40% of boards being made up of women, a target hit 3 years earlier than the expected year of 2025.[18] Another example of progression is members of Sustainable Trading, made up of global trading firms, joining together to improve social inclusion by building best practices around DEI, community engagement and employee wellbeing. The expertise and experiences voiced by trading employees in the membership have driven a practical approach to improving the work environments of the trading industry. It is not a coincidence that as women have been accepted into the workforce, there have been more corporate and public policy protections for women and a slowly evolving cultural acceptance. It is the representation of diverse identities that can better govern a diverse workforce. Trading is an environment that can be fulfilling and exciting for prospective employees; attracting women to this industry can benefit them and the firms they join. Since it is impossible to quantify if masculine cultural norms, the history of exclusion, or employment policies favouring specific identities are the main cause of low female employment rates in the trading industry, it is important to focus on improvement across the board to achieve gender equality in trading.

References:

[1] https://home.barclays/news/2020/09/how-barclays-is-promoting-gender-diversity-on-the-trading-floor/#:~:text=Less%20than%2020%25%20of%20roles,built%20successful%20careers%20in%20Markets.

[2] https://sustainable-trading.org/the-path-to-sustainable-trading-exploring-diversity-and-sustainable-practices-at-industry-events/

[3] https://www.londonstockexchange.com/discover/news-and-insights/charting-50-years-change-women-uks-finance-sector

[4] https://www.legislation.gov.uk/ukpga/1975/65/enacted

[5]https://www.legislation.gov.uk/ukpga/1976/74/enacted#:~:text=An%20Act%20to%20make%20fresh,into%20conformity%20with%20the%20corresponding

[6] https://www.ft.com/content/aff6433f-5231-465a-a96c-a2219c2d1dc1

[7] https://25373993.fs1.hubspotusercontent-eu1.net/hubfs/25373993/ST%20DEI%20Questionnaire%20Report.pdf

[8] https://www.sciencedirect.com/science/article/pii/S0305750X18303309

[9]https://books.google.co.uk/books?hl=en&lr=&id=DG4ZEAAAQBAJ&oi=fnd&pg=PT30&dq=info:Yo183QS_s0MJ:scholar.google.com&ots=zcHfNdnSdy&sig=1guINQrlmFkJxHVPZ0eCoorFUww&redir_esc=y#v=onepage&q&f=false

[10]https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/womenshouldertheresponsibilityofunpaidwork/2016-11-10

[11] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A31992L0085