Morning Coffee: Technologists at UBS have good reason to feel nervous. Multistrategy hedge funds want a piece of your soul

Investment banks' IT systems are meant to be governed by the “Law of Five Nines”.  That’s the standard of 99.999% uptime which is regarded as the highest levels of reliability that can be delivered by computer and telecoms systems. For systems that are “always on”, this translates to no more than five and a half minutes of outage every year; for a trading system that’s only in use during market opening hours, you might arguably stretch that to a couple of hours.

💥Follow us on WhatsApp for news alerts.💥

However, in the real world, trading systems are just as likely to be subject to “Finagle’s Law of Dynamic Negatives”, which states that “if something can possibly go wrong, not only will it go wrong, but it will do so at the worst possible moment”.  And this scientific principle appears to have been in action this week for UBS.

It doesn’t look like the outage they’ve experienced has been particularly far outside the operating envelope.  Bloomberg reports that “some trading" at the bank was "halted" yesterday, which implies that most of it wasn’t. The bank reportedly identified the problem and deployed a fix within the day. If something like this had happened during a quiet summer afternoon, it would hardly have been noticed.

 But, of course, markets are absolutely not quiet at the moment. Commodities, equities and rates are all experiencing volatility due to events in the Gulf, and some banks have already warned that revenues are being affected. There are few things more frightening than the rage of a trader who is stuck in a losing position because they can’t get their screen to work.

The outage comes at the worst possible time for UBS techies in career terms, as well.  They already have things to worry about. Mike Dargan, the former COO and group chief technology officer, left last December.  The "final phase" of  the integration of the Credit Suisse systems is underway and the bank plans to cut 3,000 technology jobs in order to realise the synergies.

There’s no evidence that any of these things were particularly related to the recent outages, except the general principle that happy ships always seem to have better luck. It will have been a particularly frustrating episode for UBS top management as well.  When you’re engaged in a battle with the regulators over whether they’re being too tight and controlling, it’s embarrassing to have any slip-up of any kind, no matter how small.

So, there might be a bit of “blamestorming” going on, somewhere in UBS this week, as people look around to find who was standing closest to the errant server when it went down. Usually the most sensible thing to do in this sort of period is to find someone who is leaving the bank anyway, and ask them to do a solid last favour on their way out.

Elsewhere, the latest euphemism for hedge fund managers is “pod exhaustion”.  This describes the way that you feel if your investment style isn’t suited to the tight risk limits and centralised management of a multistrategy fund.  As a reason for striking out and starting your own fund, it certainly sounds better than “losing money” or “being fired”.

The culture issues are real, though.  Granted, big pod shops are able to make a persuasive case that they have the resources to look after their people (one recruiter even hired a night nurse for a trader with a newborn baby, so that he could get a few hours sleep and consider the job offer properly).  But as well as “short term and repeatable” returns, they want your full commitment – if you have a social media presence or a research publishing business, like macro manager Alfonso Pecciatello, that’s likely to be a deal breaker.

That’s why some traders are turning down multistrat offers, and others are taking pay cuts in order to be their own boss.  (Even the strongest performing pod shop managers are, increasingly, “spinning out” their own funds).  The problem, though, is that it’s very difficult to make anything like as much money this way.  As one multistrategy recruiter bluntly put it, “What are you doing with this Mickey Mouse little fund?”

Meanwhile …

AI evangelists have discovered that people who have a Bloomberg Terminal tend to get really cross at any suggestion that it might get taken away, and consequently don’t like being told that a vibe-coded startup will replace the whole system. (WSJ)

Somewhat less emotionally, a markets professional explains how it’s not just the code and data that gives the Terminal its stickiness. (Rupak Ghose)

The management consultancy equivalent of “pod exhaustion” is “AI brain-fry”.  The secret to avoiding it is to limit the number of agents and tools that you’re meant to be keeping track of at any one time. (Business Insider)

After the controversial collapse of his alternative investment firm, Mark Sowerby took solace in swimming very long distances in extremely cold and/or shark infested seas and nearly dying a lot. There’s a film out about the lessons he learned.  (Guardian)

“The loudest voices in crypto are rarely the richest”.  A journalist starts writing an article about the new digital zillionaires, but then finds that people are not quite as keen to talk about the new world when the bitcoin price is falling.  Featuring Mike Novogratz, Cathie Wood and a VC who rates potential founders on a scale of “rizz and tiz” (charisma and autism). (Vanity Fair)

“Great … six months, guys”? If the SEC goes through with its proposal to remove the obligation for quoted US firms to report quarterly, it may involve a step change in the need for investor relations professionals, lawyers and analysts, all of whose workflow has been organised around the seasonal rhythm of results announcements. (Business Insider)

Why are insect farming startups going bankrupt?  The answer is apparently a little more complex than “why do you think”. (Naked Capitalism)

Have a confidential story, tip, or comment you’d like to share? Contact: +44 7537 182250 (SMS, Whatsapp or voicemail). Telegram: @SarahButcher. Signal: sarahbutcher.22  Click here to fill in our anonymous form, or email editortips@efinancialcareers.com. 

Bear with us if you leave a comment at the bottom of this article: comments are moderated intermittently by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. You must take sole responsibility for comments you post on this site. We will take reasonable steps to weed out anything that we consider to be offensive or inappropriate.