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Morning Coffee: The new elite in Goldman Sachs' securities division. Getting into McKinsey & Co.

There's a new top team to belong to in Goldman Sachs' securities (sales and trading) division, and it's not comprised of traders.

As we noted yesterday, this year's in-demand skill-set is that of technologists with experience of working on high speed trading systems. Goldman Sachs has been hiring people of this ilk. And now Business Insider reports that the firm has set up a new crack team within its engineering unit to oversee the 'front-to-back development and management of trading systems.'

Managed by Raj Mahajan, the former CEO of high speed trading firm, Allston Trading, who joined Goldman in early 2015, the new group (which doesn't seem to have a name), will reportedly deal with every aspect of the trade lifecycle and be as attuned to client needs as front-line traders. In the past, BI says Goldman had a "patchwork" of technology teams that didn't always always report to securities division leaders. Now Mahajan will report to Goldman CIO Elisha Weisel and to Ashok Varadhan, who now heads the securities business. 

The move confirms that engineers are at the forefront of Goldman Sachs' securities division before David Solomon becomes CEO. Solomon is determined to improve Goldman's electronic and algorithmic trading systems after years of neglect during which Morgan Stanley and J.P. Morgan ate Goldman's lunch. 

Mahajan isn't the only man to know: the new team will be co-headed by Konstantin Shakhnovich, head of Goldman's fixed income systematic market making group, under whom the firm has built an algorithmic fixed income engine praised by Solomon in a recent presentation, and by Ezra Nahum, a senior strat at Goldman Sachs, who was previously running fixed income sales strats globally and will therefore bring client awareness to the mix.

As Goldman seeks to recover market share, the new group is confirmation that the war will be won or lost on the ability of quants and engineers.

Separately, it may be harder to get into strategy consulting firm McKinsey & Co. than into any leading investment bank. In an interview with the Financial Times, Kevin Sneader, McKinsey's incoming managing partner, said the firm received 750,000 applications from people who wanted to work there last year. This compared to "just" 110,000 applications to Deutsche Bank and a mere 100,000 at Morgan Stanley. Sneader said fewer than 1% of McKinsey applicants are accepted.


Andrea Enria, the head of the European Banking Authority, says banks aren't ready for a situation where the UK crashes out of the EU with no transition period in March 2019. (Financial News)

Citi hired James Fleming, who ran equity capital markets for Europe, the Middle East and Africa at BAML, into a similar role. (Financial News) 

Pascal Boillat, the former chief information officer and head of operations, corporate and investment banking for Deutsche Bank, joined Commonwealth Bank as the new CIO. (Finextra)

UBS is investing further in Evidence Lab after corporate, private equity and supranational clients asked to look at its very many datasets.  (IFRE)

Richard Buxton, chief executive of Old Mutual Global Investors, says his firm is "inundated" with CVs from analysts at investment banks who are trying to escape from MiFID II. (Financial Times)

Commerzbank is experimenting with artificial intelligence technology that automatically generates sports reports to see if it can write basic analyst notes, as Mifid II forces banks across the world to trim research costs. (Financial Times) 

How hedge funds paid for their very own Brexit polls before the referendum result, and were able to preemptively short the pound as a result. (Bloomberg) 

How self-employed ex-bankers working from home with their dogs and a handful of employees are beating big banks to Silicon Valley convertible bond issues. (WSJ)  

Inside the new office J.P. Morgan built to make technology workers feel special. (Business Insider) 

Natural language processing and machine learning discern that hedge fund names contain common root words like: value, street, point, river, hill, rock, view, pacific, bridge, blue, wealth, new, creek, alpha and stone. 'A very typical name construction using root words would be something like Value Street Capital.' (PIonline) 

Deutsche Bank's austerity measures are working

— Thornton McEnery (@ThorntonMcEnery) June 25, 2018

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AUTHORSarah Butcher Global Editor

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