Traders vs. Quants: Is the Gap Closing?
Seems like, after talking with lots of folks around S&T and Quant divisions, that Traders and Quants are converging towards a single role. A lot of BBs now allow S&T Interns to rotate on Quant desks, and vice versa. Also seems like coding and modeling is an advantageous skill for traders.
Do you guys think these roles will continue to eventually morph into a single 'quant-trader' role? Given how algorithmic everything is becoming, I can't help but wonder.
Would love to hear perspectives from traders and quants alike!
it already has
yeah....fewer traditional trader job openings...more quant trader job openings...this is a trend that has been only getting stronger for years now...there are now more quant seats than trader seats...and that will only increase
Not the bonus. Bonus allocation in BBs are all about politics. Most of quant head or quant trader heads are treated as second class citizen, like glorified risk and ITs.
Why? Because in almost every bank, big money come from illiquid desk that focus more on relationship instead of trading skills. Quants and quant traders can be easily replaced by some cheap foreign students. But a trader with strong relationship is harder to be replaced.
Great point. But if traders are the ones building strong relationships like you mentioned, then what about Sales people on those illiquid desks? Are they starting to become more redundant due to traders building those relationships?
Probably true but clearly misguided when you have market-making firms offering 1m USD packages to top quants out of school. BBs are clearly missing something in terms of getting value from their quants in the current markets.
1 m is way too big number, I know nobody who pays more that 300k
Depends on what you mean. Quants help build analytics and e-trading platforms. Traders provide prices (relying on analytics) to customers through an omni-channel distribution approach. Right now, e-trade is hot, but there is likely going to be a mix of e-trading and voice/chat-trading for some time. This is because PMs want JUST prices 80% of the time and want price + info 20% of the time. Similar to like how a high end consumer may want to check out a few luxury goods in store (and enjoys the experience) even as most of their buying (high volume low price, not true for high price low volume transactions) may happen online.
However, the amount of risk-taking roles will probably shrink unless banks are able to leverage their balance sheet more widely again.
That’s exactly my point! Most of traders nowadays can’t even make a risk bet! They are basically like quote machine plus human hedger. More company actually start hedge automatically as they choose to not take a view of the market.
Well yeah if you want to be a risk taker go to a hedge fund or the buy side. The sell side is there to service the buy side, not compete with it. If you’re a trader at a sell side firm and want to be doing that for a long time, learn about the strategies hedge funds utilize and start learning. Buy-side risk taking is verrrry different than the sell side experience. The one spot where the sell side is still amazing is in how massive some BB balance sheets are.
Investment bank trading = huge size, less risk per dollar
Hedge fund trading = small to mid size, higher risk per dollar
If this is the case, wouldn't Quants just be Software Engineers who support Traders? What's with the Ph.D in Maths or MS in Financial Engineering requirement nowadays, when most S&T folks are undergrads- Is there something I'm missing?
In addition to those stuff, they build pricing models and all complex tools used by traders. Particularly for complex structured products, the pricing tool is usually developed by quants, which make PhDs and advanced maths knowledge particularly useful. This is usually NOT done by traders and structurers - which is why I don't agree the roles are merging.
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