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Morning Coffee: 23-year-old with ideal lifestyle gives bankers lesson in modesty. Return of the pit trader?

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Hang 10, then fight cybercrime

Financial services professionals should be concerned that the best and brightest young people may want to eschew Wall Street and the City and instead follow the example of Marcus Hutchins.

He’s a 23-year-old self-taught computer-security researcher and avid surfer. He wears a mop of curly hair, baggy jeans, a T-shirt and sneakers rather than a suit and tie and has never worked in an office of any kind, much less a bank or hedge fund. He gets to work remotely from the seaside town of Ilfracombe in the U.K., surfs a lot of the time, and is able to get out of bed at 6pm on a weekday if he so chooses.

In an echo of Navinder Singh, the British trader accused of causing the flash crash, Hutchins also lives a very low key life living with his parents. His parents and friends didn’t even know that he had a job until last month.

Unlike Singh, however, Hutchins put his talent to use in ‘saving the world’. He is credited with putting a stop to the vicious WannaCry cyberattack in May. Having learned to program computers at the age of 12, Hutchins was quietly hired by Los Angeles-based cyberthreat-intelligence firm Kryptos Logic in 2015.

Newly famous, Hutchins could probably name his price. Even before WannaCry, he was being pursued by some of the world’s biggest cyber security firms. Except – and in a lesson to bankers used to bigging themselves up –  he’s surprisingly self-deprecating. “My employer was already paying me way more than I was worth, so the whole WannaCry thing didn’t really change anything,” he told Bloomberg, adding that he’s not thinking of asking for a pay rise because he was given one before this all happened. “My friends still don’t believe that I have a job,” he adds, before going to bed after another all-night party.

Separately, despite the fact that everyone assumes electronic trading has won the war against open-outcry pits and that trading floors are in their death throes, old-school pit traders adept at shouting and hand signals aren’t going down without one last fight.

If you’re among the Wall Street traders lamenting the end of good old-fashioned floor trading, then you should know that there’s one exchange in your corner: Box Options Exchange is trying to launch the first new open-outcry pit in the U.S. in decades. Its plan is to create a new open-outcry floor for about 40 human traders at the Chicago Board of Trade Building.

While most trades are done electronically these days, open outcry has persisted in options trading – it accounts for about 13% of U.S. options trading, according to Burton-Taylor Consulting. Box Options Exchange has one of the smallest market shares in U.S. options and is trying to grow its business.

Some options traders said the open-outcry model could help investors who want to prevent prices from moving when their large options orders are getting executed.

“There is still a role for human traders,” said Andy Nybo, a director at Burton-Taylor Consulting.

However, rival exchanges and market makers have filed critical letters arguing that another trading venue will exacerbate the market’s fragmentation and lead to less transparency, according to the Wall Street Journal.

The U.S. Securities and Exchange Commission plans to decide the fate of the proposal for a new trading floor by Aug. 2.

Meanwhile:

UBS is among the banks looking to use AI to boost traders’ performance. (FT)

The heads of trading desks are spending less time trading than ever before as rapidly evolving regulations are taking up more of their time. (The Trade News)

Execution brokerage ITG hired Michael Onofrio, previously an executive director of the European equities electronic coverage team at J.P. Morgan, as director of the U.S. electronic coverage team in New York. (Finance Magnates)

Morgan Stanley’s people have their swagger back, and they are determined to press home their advantage with a ruthless approach to deploying the firm’s capital – both financial and human. (Euromoney)

J.P. Morgan CEO Jamie Dimon met Irish Prime Minister Leo Varadkar in Dublin to discuss expansion in the Irish capital city. (Reuters)

Parisians are rolling out the red carpet for City bankers looking to relocate post-Brexit. (FT)

In a non-confidential IPO filing, the SEC sometimes requests changes in the registration statement, which can be embarrassing for the company, as well as its lawyers and bankers, so confidential filings have proved to be reasonably popular, but will they lead to more insider trading? (New York Times)

Soon, brokerages will have to decide how much to charge for research and the access to top executives that typically comes with it, and many will offer cable TV-like subscriptions. (Bloomberg)

David Solomon, the president and co-COO of Goldman Sachs, is selling his 83-acre Aspen, Colorado, estate for $36m. (Business Insider)

Brevan Howard has something to hide, and it successfully sued Reuters to keep it hidden. (Reuters)

Ready, set, go! The data science arms race is underway. (Barron’s)

How to find out whether your job will be automated. (Bloomberg)

Engineers are using cognitive psychology to figure out how AIs think and make them more accountable, so if this whole financial services thing doesn’t work out, then you might consider a career as a robot psychologist. (WSJ)

There are 125 very important people in finance who you’ll want to follow on Twitter. (Business Insider)

Are you well-off, rich, super-rich or stratospherically rich? There’s a big difference. (Business Insider)

Photo credit: Surf by Claudio Jofré Larenas is licensed under CC BY 2.0.

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