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The renewed appeal of the algorithmic trader

When Lehman collapsed and pre-existing notions of reality proved badly wrong, the algorithmic traders who built models based on those notions suddenly became a lot less popular. Now that the world’s become more predictable, they’re hot again.

Last month Anshu Jain, global head of markets and joint head of investment banking at Deutsche, told Euromoney that algorithmic trading was helping the bank reduce spreads and capture market share. Similarly, Dixit Joshi, head of European and Asian equities at Barclays Capital, told Financial News that algorithms are proving key to minimizing transaction costs.

Unsurprisingly, this is encouraging recruitment. Earlier this month, Jefferies hired the quant strategies trading team from UBS, Barclays Capital hired David Tait, Morgan Stanley’s former head of electronic trading, Execution hired Tony Nash (formerly of Lehman), and Citi has reorganized is electronic trading division in an evident bid to conquer the electronic trading world.

Joe Wald, managing director of Knight Capital group, an electronic brokerage house, says market conditions mean algorithms are increasingly being used to source liquidity.

“There will clearly be more demand for people with expertise in algorithmic trading as the market becomes more complex and fragmented across new exchanges and multi-lateral trading facilities,” says Wald. “There is a huge opportunity for people with expertise in this area.”

Dominic Connor, managing director of P&D Quant recruitment, says algorithmic trading is comparatively buoyant and that a lot of algo traders are still miffed about low bonuses last year. However, many are reluctant to move because their current employers typically own the algorithms they’ve been working on.

Comments (2)

  1. Equity algo traders and quants were not directly affected by the Lehman collapse as they were irrelevant to the cause. Granted recruitment slowed but this was emdemic across markets.

    Looking at the people moves in this sector for the past 18 months it has been strong and this will continue as more people search for “best execution”, banks try and catch credit suisse and IDB’s endeavour to capture some market share in the sector – driving the need for hires.

  2. All the MTFs are bonkers. Why the EU just doesn’t mandate a pan European exchange owned by it’s members in a SWIFT stylee is beyond me. Baikal, Turquoise, Chi-x, Wine etc etc forever. Money for old rope for vendors.

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