Quant Jobs So Convoluted And Opaque, Even Supervisors Have Given Up On Understanding What Is Going On
Even as the entire HFT industry is on edge, and fighting against very justifiable allegations that it is setting the market up for another October 1987 type event due to the increasing preponderance of computerized trading, the ever so vocal industry leaders have had no time to do precisely the one thing that they are accused of: understanding their own business. According to a recent survey by Finextra.com, two thirds of quant analysts think their supervisors do not understand the work they do. Some more not very surprising details about an industry much more concerned about defending its revenue streams than protecting investors (other than Goldman Sachs):
86% of quants feel their supervisors' level of understanding of the
job of a quant is the same or worse than it was a year ago. In
addition, 70% feel that the level of understanding of the role of
quants within their institutions has decreased or has not changed at
all from a year ago.
Perhaps all HFT/algo/Flash/Dark Pool etc. defenders can instead do one or two refresher courses so they atually know what the hell they are talking about instead of just following the Goldman patented formulation: "blah blah blah liquidity blah blah blah spreads tighter blah blah blah no more market crashes blah ever blah blah blah where is my G-V parked blah?"
Paul Wilmott, who has been a vocal supporter of the fight against the visible and invisible threats associated with quant strategies noted: "These numbers are alarming. They indicate that even with the events of
the past year, financial institutions are still not taking the
importance of financial education seriously, especially as it pertains
to improving relationships and understanding between quants and their
As HFT now amounts for well over half of all stock volume trading, a major crash in any of the core infrastructure pipelines would lead to a virtual standstill of the market. Yet the Senior Supervisors Group (SSG) that comprises watchdogs from seven
countries (United States, Canada, France, Germany, Japan, Switzerland,
United Kingdom) says that "underlying weaknesses in governance,
incentive structures, information technology infrastructure and
internal controls require substantial work to address."
Just like the Fed and the administration, the quant industry is busy yapping and doing all it can to protect its livelihood, when instead it should be reading up on SPARC-cluster (yes yes, we know, we know) manuals and how to stuff a few gigabits down an OC-12 fat pipe, all the while churning the crap out of AIG and making $0.001 on every trade.