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What algorithmic trading jobs are really like in investment banks

Algorithmic trading is one of the premier technology jobs in finance on both the sell and the buy side. While hedge funds and HFT firms are generally much smaller teams with a more unified vision, banks are huge institutions with all manner of clients.

How does this affect the way they work? A recent webinar from financial analytics infrastructure firm ISS LiquidMetrix on how algorithmic trading teams in banks evaluate their strategies offered some insights.

Experimentation is key

Philip Pearson, Barclays director and head of Americas electronic product (formerly head of equities algorithmic trading product at JPMorgan) says a strength of electronic trading teams in banks is their ability to experiment with strategies en masse. 

"If you have one PM, experimentation isn't necessarily hand-in-hand with measuring and evaluating algorithm strategies," says Pearson, "

But for us, it's very much part of the process... we're running 10, 20, 30 different experiments at any given time. We're looking at how different things are doing in different volumes, regimes, etc."

This where banks can have the edge. Pearson says this strength in numbers, extended to experimentation, can be "crucial to your overall strategy and your overall measurement and evaluation."

Speaking to clients is encouraged

Especially in something like HFT, clients are inclined to simply trust that the algorithms and their designers know exactly what they're doing. On the buy-side, a client's experience is much more tailored to their goals. Hitesh Mittal, former head of trading at hedge fund AQR, advocated for this benefit.

"It's quite helpful when you can chat about the expectations of the buy-side client," says Mittal, "and more often than not, clients are quite receptive when you start asking them questions."  These questions can be 'what is it that you're trying to accomplish?', or 'is there some appetite for taking more execution risk on these orders?'

Mittal says this approach "can really help you set up for success." It helps you consider the question, "Are you using the right tool to solve the right problem?"

David Canizzo, head of algorithmic trading at investment bank Raymond James, said in the webinar that his team "will set up calls with our clients. It's more about transparency, showing them that what we told them we did." Some clients actually asked the team to contact them less due to the frequency of interactions. 

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AUTHORAlex McMurray Editor
  • Do
    DoubtingThomas
    8 June 2023

    I saw a screenshot of the panelists in the webinar and it looked nothing like the participants in the above picture.

    More to the point, regarding what those jobs are like, I would say (from personal experience) that they are in fact, quite boring. The first equity algos started showing up some 20 years ago and they are now pervasive, with most banks having almost identical offerings, with names slightly changed. There is an enormous amount of marketing effort (smoke and mirrors) into getting clients to try algos, and a lot of the work behind the scenes is in coming up with different smokes and mirrors, experimentation included, to win over clients.

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