Looks like the FSA's going to need some algo trading quants
So. It looks like the FSA, or its replacement, is going to need a few high-powered quant types.
According to Bloomberg, and various other sources, the EU's new MiFiD rules will include a requirement for banks to tell regulators precisely how their algorithms work.
This is causing apoplexy/incredulity among some quant recruiters, who suggest the FSA has as much chance as a jellyfish of truly understanding the implications of a piece of algorithmic code.
To attempt really understand an algorithm (itself an impossibility given no one can really predict what happens once a piece of code is unleashed on the market), Dominic Connor, a partner at P&D Quant Recruitment, says the FSA will need to hire people who are top level mathematicians and top level programmers: "The standard entry level job spec is a PhD in or maths from somewhere world class or the hard edge of electronic engineering, or artificial intelligence."
To attract people of this calibre, Connor says the FSA will need to dig deep: "The absolute minimium you'd need to pay for a team who will (usually) avoid embarrassing themselves in front of people far smarter than themselves is a million per year."
Does the FSA have this sort of money?
The regulator assures us that it already has quants working in its prudential risk division. However, one quant recruiter who hires for the regulator says it's difficult to persuade people to go there and that although salaries are comparable with banks, bonuses aren't.
"Most quants want to work close to the trading floor and see the FSA as a bit middle office," he confesses.
Without algo quants of the highest calibre, the regulator's endeavours will descend into the purest box ticking, claims out Connor. Whatever the case, chances are that banks won't divulge their valuable codes anyway.
On the other hand if regulators really are obliged to sign off all algorithms, working for one could prove an ideal opportunity to scope the market.
"If you do it [work for the FSA] for two years you will be taught how most of the algorithmic trading in London works. You can then leave and go and work elsewhere for a good salary," says Connor. "I only ask that you contact me when you feel you've learned enough."
