Considering
the current economic environment, the question has to be raised as to which
roles within a financial corporation are more important to the restoration of
the company. Applying this to the quantitative analyst role, the question
translates to: “do we want personnel who can quickly improve the implementation
process of models that are already in place producing results that have
immediate effects, or a role in which time is needed to design and test new
innovative methods?” The former is referred to as a quant developer and the
latter is a “traditional” quant, and this time it’s the traditional quant who
lose out to the quant developers I’m afraid.
A glance
through any forum or job advertisement for quants’ and you get the perception
that they are referring to programmers, with all talk surrounding Java, VB,
C++, C# etc. In fact, it has now become a standard requirement for quants to be
familiar with programming languages. Quite an intimidating concept really for
all those aspiring quants who have come out of higher education with a
finance/maths/physics degree expecting their knowledge to be sufficient for the
job. The reality is quants need to be well rounded with a variety of skills and
knowledge including awareness of the indications of their work to traders,
which does no harm for their own career progression either. So a new language
is on the agenda, and it must be learnt.
Could this
mean the end of “traditional” quants? Quite possibly. With a revolutionary
model already available (the position taken by the Black-Scholes equation), it
is not likely that the same will happen anytime soon. What financial institutions demand for now,
is immediate results.
Luckily,
there is also another side of the story. It seems that there is a visible trend
in quants leaving their big institutions and starting it out alone, once they
obtain a certain amount of experience. They take with them the models and
tricks of the trade learnt over the years, becoming entrepreneurs in their own
rights and consequently abandoning the traditional image of a quant sat with their
eyes glued to a computer in a dark corner somewhere in the building. The “tricks”
comprise of the application and practical side of the quantitative work,
allowing them to morph into the role of a trader. Moreover, trading positions
are becoming more and more technical with a high degree of quantitative skills
required as complex trading securities become increasingly popular in trading
activities. The understanding of such instruments is not simple, to say the
least, not to mention the validation and back testing processes behind it.
Quants hold a great advantage in this respect as they already have the
quantitative skills and, from experience in the industry, the practical side can
also be obtained. For courses that provide practical applications of
mathematical theory to the finance sector, see http://www.optirisk-systems.com/newsandevents_events.asp.
With the
evolving condition of our financial markets, roles of quantitative analysts are
also changing alongside it. Gone are the traditional stereotypes and in come
the practical appliers.
