Citadel is building its team in London. Christian Hesse, who until this month was working in a hybrid sales trader and quant role at Deutsche Bank, just joined the hedge fund as a quantitative researcher.
Hesse has a PhD in Cognitive Science from Birmingham University, which is not unusual for a quant. More interestingly, however, he spent the first seven months of his banking career in 2009 working as a ‘scientific employee’ at Deutsche Bank’s secretive Quantitative Products Laboratory in Berlin, which is focused on machine learning projects.
As well as building in equities, and hiring from Goldman Sachs to populate the new team, Citadel has acquired Citi’s Automated Trading Desk Division – which was a pioneer of high frequency trading – and has also been hiring quant talent for this division.
Citadel's hire underscores the growing popularity of machine learning. Google is all about machine learning. So is Goldman Sachs. So are hedge funds. Last month, Man AHL said that it was expanding the scope of the Oxford-Man Institute (OMI) of Quantitative Finance to include machine learning and data analytics. It’s a new push, but at the time of the launch, Dr Anthony Ledford, Man AHL’s chief scientist said it had been “researching machine learning techniques and applying them in client trading programmes for several years”.
Deutsche's Quantitative Products Laboratory dates back to 2007, when the bank offered two German universities – Humboldt University and the Technical University of Berlin - $17m to finance the laboratory. In return, Deutsche has a say in the hiring of professors, a vote on the research they undertake, and - it seems, has the pick of who to hire from the student body.
Other hedge funds like Aspect Capital and Winton are also expanding their research capabilities into machine learning.