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Morning Coffee: Shock as the world’s hottest finance staff lose their jobs. The paltry pickings of the M&A rainmaker

Shock

This wasn’t supposed to happen. Quantitative trading based on complex algorithms devised by the mathematical elite is supposed to be the future. So, why did Man just close its Oxford-based “quantitative incubating unit,” and move five of the fund managers working there onto other things? 

Man itself is saying nothing. The incubator was just a side project, but Bloomberg notes that like most hedge funds Man has been cutting costs. It’s done away with the role of chief risk officer, for example. It’s also appointed a new head of machine learning who might be seen as making the quant incubator surplus to requirement.

No one’s actually leaving. The managers of the Oxford quant incubator – Francois Moreau and Jaco Vermaak – are staying. Vermaak is a dyed-in-the-wool quant who holds a PhD in engineering from Cambridge and joined from Winton Capital Management in August 2010. Moreau was Man’s former head of business strategy and a one-time trader at Barclays. The two men had been allocating money to mathematical models devised by the five fund managers in their incubation hothouse since February 2016. The other members of the team are moving into other roles at Man AHL.

Man’s quant incubator hired proven quant traders like Sanatan Rai from BlueCrest, but getting quant strategies to work isn’t necessarily easy. The strike rate on democratised quant sites like Quantopian is just 0.02%. On this basis, Man would have needed to get very lucky with just five traders. Quantopian invites anyone, anywhere to devise algorithmic trading models and only pays them if they’re successful. Maybe the best quant incubation units aren’t five quant traders sitting in the rarefied environment of Oxford, but hundreds of thousands of printer repairmen and actuaries devising quant trading strategies for free after work?

Separately, top M&A bankers earn a lot of money – but not compared to the money they earn for banks. Bernard Mourad, a former M&A “dealmaker” at Morgan Stanley in Paris, says he earned $100m in fees for Morgan Stanley in 2015. For that, he was allocated a deferred bonus of $1.5m which was withheld (Mourad says unfairly) when he left to work for a client. It’s not clear what Mourad’s cash bonus was – but assuming it was double his deferral, Mourad would have eaten just 3% of what he killed. This is why senior M&A bankers leave for boutiques.

Meanwhile:

Deutsche Bank is, ‘preparing to move large parts of the trading and investment-banking assets it currently books in London to its hometown of Frankfurt .’ (Bloomberg) 

Deutsche’s booking centre change would not have any impact on where traders are based but could require the relocation of a small number of back office jobs. (Financial Times) 

JPMorgan is expected to announce plans to create 500 jobs in Dublin this week. (Businesspost) 

John Cryan has no plans to step down at Deutsche. (Reuters) 

Deutsche hired a global head of tech services from Citi. (Business Insider) 

Susa Fund Management, a hedge fund founded in 2009 by former Citadel star Reza Amiri is closing. (Financial News)

Andrew Bailey, chief executive of the UK Financial Conduct Authority, earned £449k last year. His predecessor, Tracy McDermott, was paid £570k. (Financial News) 

“We worked hard, we paid our taxes…I ask myself why should I make an effort for this country which I don’t belong to and which treats me like a second-class citizen.”  (Financial Times) 

Jefferies CEO tells staff to stop fixating on Putin and Kim Jong-Un.  (Jefferies) 

Man feels bad for collecting full time pay despite automating his job six months’ ago. (Quartz) 


Contact: sbutcher@efinancialcareers.com

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