Veteran quant joins Millennium as a risk manager with one unique responsibility

A quant trader and researcher who cut his teeth at Lehman Brothers has joined Millennium Management in an interesting new role that may have consequences on who the hedge fund ultimately hires. Derrick Li started at Millennium in New York in August.

Li’s new position at Millennium has some similarities to his previous career stops at Nomura and Barclays – he’ll still be building quantitative analytics tools and covering equity derivatives. But Li noted on LinkedIn that part of his duties as a risk manager include interviewing prospective portfolio managers and evaluating their trading strategies. It appears Millennium is working to mitigate potential trading risks before employee badges are ever handed out.

Beginning his career at Lehman Brothers as a software engineer, Li eventually transitioned to Barclays as an equity derivatives quant after Lehman fell into bankruptcy during the financial crisis. He moved on to Nomura in 2016 where he built systematic volatility strategies and trading infrastructure across equity, credit, rates and commodities while also beginning to work on risk-hedging strategies – a mix of experience that likely set him up for what seems like a hybrid risk management role at Millennium.

While it’s unclear if Millennium is one of the first hedge funds to bring risk managers into the hiring process, the practice isn’t known to be a common one. However, the Financial Stability Board (FSB) recently made a number of recommendations to financial firms to help eliminate potential sources of risk, including bringing employees who work in control functions like compliance and risk into the hiring process and giving them a partial say in who should receive an offer.

Tasked with monitoring the global financial system and making recommendations to regulators, the FSB has no actual authority to impose mandates, though it still wields plenty of power behind the scenes. Perhaps we'll soon see more risk and compliance officers with a seat at the hiring table.

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