How Does a Bank Work?
In the dog-eat-dog corporate jungle, there always is a hidden agenda. Always. In writing this series of posts, I have a hidden agenda as well. It is to promote my book – Principles of Quantitative Development. Everything I say here is described in much more detail in the book. And, the book goes into topics that I do not plan to touch upon here – like a review of computing principles for quants, quant developers and people involved in trading and trade lifecycle management. Finally, the book comes with a mini trading platform illustrating many of the principles described.
If these compelling reasons have failed to convince you to fork out fifty or so dollars to order the book from Amazon, consider your own hidden agenda. Why are you reading these posts? You are probably considering a lucrative career as a quantitative professional in a bank. Or, as a junior quant professional, you would like to know more about how the whole thing works. And Principles of Quantitative Development may help you in that quest.
To get back to my point, there always is a hidden agenda, and the associated petty politics. If you cannot play the political game, a bank is not the right place for you. That may sound like bad news to you. Let me give you the good news. Almost everybody is better at politics that they think they are, And almost everybody in the bank, regardless of how high they are, goes about feeling that they are not doing as well as they should, because they don’t play the political game . So don’t worry too much about it even if you fee that you are not good at it — you are probably better than you think you are.
My real point is just that you should be aware of hidden agendas — in day-to-day interactions, corporate memos and announcements etc. For instance, let’s suppose you get a congratulatory email from your big boss about a project you are working on, saying you did an excellent job, it’s going to save or make so many millions of dollars, and everybody is mighty pleased about it. You may also feel mighty pleased about the message, and start thinking of that big break, promotion, bonus, corner office, expense account etc. But it may turn out to be a precursor to letting you go — after all, you did such a wonderful job, and your work here is done!
Regarding the agenda of these posts, this series of posts will cover the items listed in the picture above. In the next post, we will go through what we call a Trading Platform because that is the arena of Quantitative Development. The next few posts will be on the structure of an investment bank, from the perspective of a quant and a quantitative developer. The structure, in some sense, is the static topology. How trades flow through it will be the subsequent few posts, which will be the dynamic evolution of a trade. As ia trade moves from one department to another in a bank, the players involved use their own work paradigms and perspectives to view and deal with it. It is important to understand these perspectives so that a quant developer can understand and appreciate the myriads of requirements thrown at him. After all, his product — the trading platform — mediates everything.
In order to give you more of a flavor for the workings of a bank, the whole series of posts will be peppered with some little tidbits of information that may read like newspaper columns — after all, I started my writing career as a columnist. In my book, these tidbits are called the BIG PICTURE.