It's hard to get promoted in banking. As a recent study by financial consulting firm Quinlan Associates made clear, most bankers get stuck at around vice president (VP) level. Plenty of them leave. Who and what is stopping them from getting ahead? The Wall Street Journal might accidentally have identified the culprits.
In its latest article on quants on Wall Street, the Journal looks at the people who aren't the quants - the older, less numerate generation who got in before a PhD (or at least a Master's) in mathematics was a help. It discovers that not only are they not quants, they're jocks - the antithesis of quants. And the new generation of mathematical geniuses is their nemesis.
The jocks are former athletes. As little as a decade ago, the people doing the hiring on Wall Street thought these athletic types were the ideal. The jocks had strong enough stomachs for risk-taking and a good temperament for winning clients’ trust and business. Former football, lacrosse, hockey, wrestling, tennis, soccer and crew stars jostled for position on trading floors. Some worked their way up the ladder. For example, former investment bank CEOs John Mack, Henry Paulson and Alan Schwartz were all ex-athletes. It turns out that there are so many former wrestlers on Wall Street there's even an ex-wrestlers' 'meet-up.'
Now the quants are resurgent and the jocks are out of favor. The jocks are not happy. “Athletes are better equipped at knowing you’re not always going to win,” a former co-captain of the Columbia University wrestling team who's spent over a decade in equity sales, tells the Journal. “In sales, you’re going to get a lot of doors slammed in your face. It’s how you bounce back from those losses that define us.”
The Journal doesn't explicitly blame the jocks for obstructing the quants, but the generational gap is all too clear. The cerebral athletes are being pitted against the physical athletes and - for the moment - the physical athletes are still in the top positions. As sales jobs are automated along with compliance and risk systems, quants are likely to win-out. Disgruntled jocks can only complain about their vanquishers in their sports meet-ups. But banks may not want to do away with the jocks altogether. The ex-athletes possess discipline and quick thinking. They also have years of experience of the markets, while the AI systems built by quants are still unproven.
Separately, executing fake trades and sharing confidential information with traders at other banks are quick ways to self-sabotage your trading career. A regulator accused FX traders at BNP Paribas of doing just that and adjusting prices based on the inside knowledge.
The New York State Department of Financial Services (DFS) found that a trader located in the New York branch masterminded several schemes to manipulate prices and spreads in several currencies, according to The Trade.
A group chat with a “cartel” of other traders allegedly made plans to manipulate the price of the South African rand during New York trading hours to reap higher profits.
DFS accused BNP Paribas of paying little to no attention to the supervision of its FX trading business, allowing its traders to violate New York State laws for several years. It fined the bank $350m for failing to manage its FX trading teams who were manipulating FX rates, executing fake trades and sharing confidential information.
John Gallo, the head of U.S. fixed income sales at Deutsche Bank, is preparing to leave the bank after just 20 months in the role. (Business Insider)
Citi retained its place at the top of the global foreign exchange markets ranking, controlling 10.74% of the overall market, a fall from nearly 13% in the previous year, while J.P. Morgan placed second with 10.34% of the market. (Business Insider)
BlackRock has boosted its assets under management to a record $5.4 trillion thanks in part to quant programs. (WSJ)
Wall Street professionals commuting from the suburbs to Manhattan need to prepare for a “summer of hell.” (Bloomberg)
This new fund of private equity funds is hiring in New York. (FINalternatives)
The US Department of Justice has charged partners and analysts at the hedge fund Deerfield Capital Management with insider trading. (New York Times)
Many a hedge fund manager has been burned by trying to predict the impact of politics on the markets. (New York Times)
Financial technology startups are calling themselves “regtech,” not fintech, to convince banks their products are must-have. (Financial News)
Wealth management firms say they’ll need approximately four years on average to comply with the new MiFID II requirements. (The Market Mogul)
If the clearing of euro-denominated derivatives moves from the City to the continent post-Brexit, Aberdeen and others would follow suit. (Financial News)
MBA students doing investment banking internships, beware the overconfidence that can often cause you to squander opportunities. (FT)
Air rage is related to status anxiety. (The Guardian)
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