Tag Archives: Corporate Life

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Three Parrots

Once upon a time in India, there were three parrots. They were for sale. A prospective buyer was interested.

“How much is that parrot?” asked he, pointing to the first one.

“3000 rupees.”

“That’s pretty steep. What’s so special about it?”

“Well, it can speak Hindi.”

The prospective buyer was impressed, but wanted a better deal. So he probed, “How much for the second one?”

“5000 rupees.”

“What? Why?”

“It speaks Hindi and English.”

Thoroughly impressed and interested by now, he tried again. “How about the third one?”

“10000 rupees,” was the reply.

“Wow! How many languages does it speak?” asked the buyer.

“None. It doesn’t say a word.”

“Well, then. It must do some wonderful tricks. What can it do?”

“Nothing. It just sits there.”

Outraged, the buyer asked, “Why are you asking for 10000 rupees for it then?”

“Well, the other two parrots call it ‘Boss’,” explained the seller.

Moral of the story: All parrots are birdbrains. Why would they be for sale otherwise?

Photo by mybulldog

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Instant Water Heater

My primary degree is in engineering of the electric/electronics variety, which is why I can fix LED lights, for instance. I suspect an engineering degree gives you more of a theoretical understanding rather than practical knowledge. I mean, I’m no electrician. At times, I take on projects where I may have been better advised to call an electrician.

Recently, our maid’s instant water heater died, and some action on my part was indicated. Though an engineer, I have been in the corporate scene long enough to know that the right response to any action item during a meeting is, “May be by next Tuesday.” So I asked the maid to use my mother-in-law’s bathroom, thinking that I could postpone this issue to one of the future Tuesdays. But the maid, probably bound by some sacred ethical covenants of her profession, refused to do that. At that point, I should have called the electrician. But I foolishly decided to take a look at the prima facie evidence. The switch looked fine, with its indicator light coming on as expected, but the water heater remained intransigent.

Knowing, theoretically, that the most likely point of failure was in the heater, I decided to focus my formidable intellect on it. It turned out that the darned thing was so neatly installed by the electrician (with insufficient theory, I bet) that it was impossible to even open it. A closer inspection revealed a tiny screw near the bottom, which looked promising. But I didn’t have a screwdriver handy right then (when I was on the ladder, I mean). Then again, what was there to see? What else could be wrong?

Once I diagnosed the problem using the sheer power of pure intellect, I used the second lesson I learned during my corporate years — transference. I called my wife and informed her that she needed to get a water heater; her commute route ran close enough to a bunch of appliance stores, and by arguments of proximity and convenience, she was much better placed to get it. Furthermore, I would do the installation myself, and that gave me the edge in the argument of division of labor as well. But my wife, much better schooled in the corporate games, promptly skipped the country thereby nullifying my proximity and convenience advantages. I should have called the electrician then, I can see clearly now in hindsight.

An engineer is nothing if not resourceful. If we can save a trip to the local mall or the appliance shop using eBay and the Internet, why wouldn’t we? I know this statement also nullifies proximity and convenience arguments, but know this — no action is always better than even convenient action, and the proximity argument still applies, as long as it can save an action item. I ordered the heater online, and they delivered it in about five minutes. These guys need to take a chill pill. Seriously.

Anyway, I ignored the box for as long as possible. Finally, I located the elusive screwdriver and dismantled the broken heater. It turned out to be remarkably easy to install the new one. The only issue was in lining up the front panel knobs with the internals of the heater. It took me a while, but I finally managed it, The installation wasn’t as sturdy as the electrician’s, but its theory was clearly superior. Then came the cutover process and user acceptance tests. The switch clicked on, with the bright red pilot light indicating that all was well with the world. The faucet opened, and water ran nicely and in copious quantities. But it ran cold.

An engineer is seldom flummoxed by a hundred dollar (plus shipping and handling) water heater. Not for long anyways. No, he focusses his sheer and pure intellect on the next possible solution, and like hot knife through butter — nay, like high-power laser though butter –it invariably takes him to the bottom of the problem at hand. Sure enough, my laser-guided problem solving methodology led me to the culprit – the switch. It was the only other moving element in the system, the only other point of failure, the villain. It got power because its light came on. It didn’t send power because the water heater didn’t work. What could be more obvious? The only question was, really, where to get the replacement switch from. Local mall or eBay? As I was formulating a general plan of action to procure the afore-mentioned switch, it occurred to me — what if this point of failure didn’t fail either? We engineers, we learn from our experience, you see. We are logical. We are trained in abstract lateral thinking. If the most likely point of failure didn’t fail, the second most likely point is even less likely to fail — ergo, the third most likely point is in fact the most likely one. Doesn’t make sense to you? Don’t feel bad; it takes years of rigorous training to follow such intricate logic. To be fair, this lateral logic came to me after I tested the switch and found it to be working fine.

Although it meant I had to take off the carefully aligned front panel of the water heater, I did some improvised continuity tests and found the power cable, the least likely point of failure, had in fact failed. Another hour of blood, sweat and tears, and the battle — nay, the great war — against the water heater was finally won. True, an electrician may have checked the incoming power before dismantling the old heater. True, there was no need to spend $100 (plus S & H) on a new heater. But the greatness of a struggle is not often counted in dollars and cents. No, its glory transcends mere profit and loss — mundane, prosaic, vulgar even, profit and loss, how dare you? It is all about the journey, not the destination. It is about living in the present, it is about experiences, life’s lessons. (If you can think of any other vaguely applicable platitudes, please leave a comment. It will really help me out.)

As all great stories, this one also has a moral. “When you have eliminated the impossible, whatever remains, however improbable, must be the truth,” as our fellow logician, Mr. Holmes put it. In other words, eliminate the theory and call the electrician.

Photo by VeloBusDriver

Battles Too Small to Fight

A few years ago, I had significant income from online advertising because of my networked business model that worked extremely well at that time. At one point the ad serving company decided to cancel my account because some sites in my network violated their terms and conditions. They told me that they couldn’t pay me for the last two months because they had already refunded the money to the advertisers who were outraged at my T & C violations. Mind you, it was a small fortune. But a couple of months later, they decided to reinstate me. The first thing they did after reactivating my account was to pay me my outstanding balance — the money they had “refunded” to their disgruntled advertisers. I, of course, was quite gruntled about the outcome. But the joy didn’t last; they banned me again a month later.

Those who try to make bit of money online have known this for a while — big corporations with advertising or affiliate programs cancel accounts just before they have to issue the first check (crossing the usual threshold for payment of $100). How many smalltime bloggers can or will fight an MNC for $100? I was banned by an affiliate program for cookie-stuffing (an advanced technique some hackers apparently use) just as my account was due for payment. I asked them what the heck they were talking about because the only cookies I could ever stuff were Orange Milanos which went straight to my waist line, but that wouldn’t wash with the MNC involved.

About four months ago, my daughter took a part-time job with a famous ice cream chain. She worked for a couple of weeks and decided to call in sick one day because she wanted to sleep in — I suspect because of genetic factors, she is my daughter after all. She got sacked. The interesting thing is that she still hasn’t been paid. First they wanted her to come back on a specific day. Then they asked her to open an account with a specific bank. Then they wanted her to text the account details to the manager, who said he never got it. Now everything seems to be in order. I am waiting to see what the next imaginative hurdle is going to be.

I think we really need to fight these small battles. We give up too easily when the stakes are low because our time is worth more than the winnings. But then, there are crooks, both of the soulless corporate kind and the garden variety, often working hand-in-hand to reap the benefits of our indolence.

A couple of years ago, my daughter saw this online ad saying she could win an iPad if she clicked somewhere. Then she got a text message about something, which she didn’t understand. She tried once more. My telephone bill next month had six dollars charged for the two messages she received. No doubt the telephone company and the shady advertiser had all the fine prints about the charges, and the fact that it was only a lucky draw with a near-zero chance of winning. The charge was only six dollars, so I didn’t fight it. Even if I had, they (either the telephone company or the lucky-draw company) probably would have just refunded the money to get me to stop pestering them. That is not the point. There are thousands of others who wouldn’t even look at the bill to see the charges. There should be punishment for such small crimes that add up to huge loots for the crooks. May be I should give our lawyer Mike Matterson a call? I am beginning to understand the punitive-damages side of the American legal system.

If you have similar stories about small outrages that you let slide, I would love to hear of them. Do leave a comment below.

Uninsured by Default

Long time ago, I had a run-in with an insurance company. It was after my first trip back home from the US. During my four years in the sanitized and relatively virus-free conditions of upstate New York, my natural third-world immunity had deteriorated significantly, and I came back from India with a bad respiratory infection, which had stopped responding to the antibiotics my doctor uncle had prescribed me. So I went to the emergency room at the Tompkins County Hospital in Ithaca, where they determined that I had pneumonia. The medical bill came up to over $450, and had multiple parts to it, like the X-Ray, radiologist’s fees, physician’s fees, ER fee, pharmacy etc. For payment, I handed them my student insurance card and went home.

A couple of weeks later, the hospital called me to tell me that the insurance had refused to pay one out of the many bills and that I still owed them about $80. I found it weird and ask them to try again, and went back to my PhD and whatnot. Then the insurance company told me that they were refusing because the procedure was not “pre-approved.” Weirder — how could one part of the same ER visit have different reimbursement criteria? Anyway, I proceeded to ignore the bill, which soon got handed over to some collection agency who started making harassing calls to me.

The whole thing went on for a few months before I decided enough was enough. Luckily, my university had a free legal service. So I went and met Mike Matterson (or some such name) at the legal office. He listened to my plight sympathetically, and advised me that it was pointless fighting some small battles in which you would lose even if you won. But he called the insurance company and proceeded thus, “Hello, this is Mike Matterson, attorney at law, calling on behalf of Manoj Thulasidas. I would like to make a few enquiries.” True, he had to rehearse my name a few times, but he made the whole opening salvo sound impressive. At least, I was impressed with this courtroom drama unfolding before my very eyes. But nothing really happened and I went back to my Danby Road apartment determined to stretch the payment a few more weeks if possible.

But four days later, I get this letter from the insurance company stating that they had decided to pay the bill in full — pre-approved or not. I realized that a call from a lawyer meant something to the company. It meant trouble, and they didn’t want to fight a small battle either. I wondered if this was a standard practice on their part — refusing a legitimate reimbursement if the amount is too small for the policy holder to wage a legal war.

Another incident taught me that it might well be. A family friend of ours passed away a few years ago. His widow knew that he, being the prudent and caring soul he was, had some life insurance policies, but could not find the papers. So she called the two major insurance companies here and made inquiries using his national identification number. Both companies expressed their condolences to the widow, but regretted that the late husband had no policy with them. Never heard of him, in fact. A few days later, while going through his papers, she found the policies with the same two companies. She called again, and the reply was, “Oh yeah, of course. Sorry, it was an oversight.” If it was just one company, it might have been an oversight. Is it again part of the corporate policy to discourage policy payouts if at all possible? Uninsured until proven otherwise?

If you have had similar experiences with insurance companies, why not leave your story as a comment below?

Where to Go from Here?

We started this long series with a pitch for my book, Principles of Quantitative Development. This series, and the associated eBook, is an expanded version of the non-technical introductory chapters of the book — what are the things we need to keep in mind while designing a trading platform? Why is it important to know the big picture of finance and banking? Hopefully, these posts have given you a taste of it here. If you would keep a copy of the series handy, you can purchase and download the beautifully crafted eBook version.

Further steps

We went through the structure of the bank from the exotic and structured trading perspective. We talked about the various offices (Front Office, Middle Office and Back Office) and pointed out the career opportunities for quantitative professionals within. The organizational structure of the bank is the apparatus that processes the dynamic lifecycle of trades.

If the structure of the bank is akin to the spatial organization, the lifecycle of the trade is the temporal variation; their relation is like that of the rails and the trains. We spent quite a bit of time on the flow of the trades between the front office and middle office teams, how the trades get approved, processed, monitored, settled and managed. Each of these teams has their own perspective or work paradigm that helps them carry out their tasks efficiently.

Trade Perspectives was the last major topic we touched upon. As we saw, these perspectives are based on the way the various teams of the bank perform their tasks. They form the backdrop of the jargon, and are important if we are to develop a big-picture understanding of the way a bank works. Most quants, especially at junior levels, despise the big picture. They think of it as a distraction from their real work of marrying stochastic calculus to C++. But to a trader, the best model in the world is worthless unless it can be deployed. When we change our narrow, albeit effective, focus on the work at hand to an understanding of our role and value in the organization, we will see the possible points of failure of the systems and processes as well as the opportunities to make a difference. We will then be better placed to take our careers to its full potential.

Other Trade Perspectives

In the previous posts, we saw how various teams view the trading activity in their own work paradigm. The perspective that is most common in the bank is still trade-centric. In this view, trades form the primary objects, which is why all conventional trading systems keep track of them. Put bunch of trades together, you get a portfolio. Put a few portfolios together, you have a book. The whole Global Markets is merely a collection of books. This paradigm has worked well and is probably the best compromise between different possible views. The trade-centric perspective, however, is only a compromise. The activities of the trading floor can be viewed from different angles. Each perspective has its role in how the bank works.

Other perspectives

From the viewpoint of traders, the trading activity looks asset-class centric. Typically associated with a particular trading desks based on asset classes, their favorite view cuts across models and products. To traders, all products and models are merely tools to make profit.

IT department views the trading world from a completely different perspective. Theirs is a system-centric view, where the same product using the same model appearing in two different systems is basically two completely different beasts. This view is not particularly appreciated by traders, quants or quant developers.

One view that the whole bank appreciates is the view of the senior management, which is narrowly focussed on the bottom line. The big bosses can prioritise things (whether products, asset classes or systems) in terms of the money they bring to the shareholders. Models and trades are typically not visible from their view from the top — unless, of course, rogue traders lose a lot of money on a particular product or by using a particular model.

When the trade reaches the Market Risk Management, there is a subtle change in the perspective from a trade-level view to a portfolio or book level view. Though mathematically trivial (after all, the difference is only a matter of aggregation), this change has implications in the system design. The trading platform has to maintain a robust hierarchical portfolio structure so that various dicing and slicing as required in the later stages of the trade lifecycle can be handled with natural ease.

When it comes to Finance and their notions of cost centers, the trade is pretty much out of the booking system. Still, they manage trading desks and asset classes cost centers. Any trading platform we design has to provide adequate hooks in the system to respond to their specific requirements as well. Closely related to this view is the perspective of Human Resources, who decide incentives based on performance measured in terms of the bottom lines at cost-center or team levels.

Middle Office

The perspective employed by the Middle Office team is an interesting one. Their work paradigm is that of queues running in a first-in, first-out mode. As shown in the picture below, they think of trades as being part of validation and verification queues. When a new trade is booked, it gets pushed into the validation queue from one end. The Middle Office staff attacks the queue from the other end, accepting or rejecting each entry. The ones deemed good get into a second verification queue. The bad ones are returned to the trading desks for modifications in the trade entries or possible cancellations.

Middle Office perspective

A similar paradigm is employed in dealing with market operations such as fixing rates, generating cash flow etc. Market operations have their own two-stage queues. Note that the whole flow is to be facilitated by the trading platform, which should have the capability to render different views. It presents a queue-based view of the data to the middle office staff, and a report-based view to the Market Risk Management team, for instance, or a trade-centric view to most of the other teams. It is important to each team to have a basic grasp and healthy respect for the work paradigm of the other so that they can communicate efficiently with each other. It is no good ignoring the trade perspectives of the rest of the bank. After all, such trade perspectives evolved naturally out of years and years of trial and error.

Are You Busy?

In the corporate world, all successful people are extremely busy. If your calendar is not filled with back-to-back meetings, you don’t belong in the upper rungs of the corporate ladder. Like most things in the corporate world, this feature has also turned on its head. You are not busy because your successful, you are successful because you can project an aura of being busy.

Something I read on the New York Times blog reminded me of an online resource that clearly told us how to look busy. It asked us to watch out for the innocent-sounding question from your colleagues or boss — what are you up to these days? This question is a precursor to dumping more work on your plate. What we are supposed to do, apparently, is to have a ready-made response to this query. Think of the top three things that you are working on. Rehearse a soundbite on what exactly those pieces of work are, how important they are, and how hard you are working on them. Be as quantitative as possible. For example, say that you are working on a project that will make a difference of so many million dollars, and mention the large number of meetings per week you have to attend to chase up other teams etc. Then, when the query is casually thrown your way, you can effectively parry it and score a point toward your career advancement. You won’t be caught saying silly things like, “Ahem.., not much in the last week,” which would be sure invitation to a busy next week. Seriously, the website actually had templates for the response.

Acting busy actually takes up time, and it is hard work, albeit pointless work. The fact of the matter is that we end up conditioning ourselves to actually believe that we really are busy, the work we are doing is significant and it matters. We have to, for not to do so would be to embrace our hypocrisy. If we can fool ourselves, we have absolution for the sin of hypocrisy at the very least. Besides, fooling others then becomes a lot easier.

Being busy, when honestly believed, is more than a corporate stratagem. It is the validation of our worth at work, and by extension, our existence. The corporate love affair with being busy, therefore, invades our private life as well. We become too busy to listen to our children’s silly stories and pet peeves. We become too busy to do the things than bring about happiness, like hanging out with friends and chilling for no purpose. Everything becomes a heavy purposeful act — watching TV is to relax after a hard day’s work (not because you love the Game of Thrones), a drink is to unwind (not because you are slightly alcoholic and love the taste), playing golf is to be seen and known in the right circles (not to smack the **** out of the little white ball) , even a vacation is a well-earned break to “recharge” ourselves to more busy spells (not so much because you want to spend some quality time with your loved ones). Nothing is pointless. But, by trying not to waste time on pointless activities, we end up with a pointless life.

I think we need to do something pointless on a regular basis. Do you think my blogging is pointless enough? I think so.

Quant Developers

Unlike quants, quantitative developers are more product-centric. Their job is to take the pricing models (the output of the quant effort) and make them deployable and accessible to the traders, sales teams and the middle and back offices. Their primary unit of work is a product because when the product definition changes, regardless of whether it uses a new or an existing pricing model, they have to integrate it into the system. Even if it is merely a product variant, they have to implement all the infrastructure and take care of the approval processes for its downstream handling. For this reason, the work paradigm that makes most sense to a quantitative developer is product-centric.

Quant developer perspective

Compared to the quants, the quantitative developers are closer to the day-to-day activities on Front Office and Middle Office. They view the trades (identified by unique IDs) as instantiations of products. Once booked, they end up in the trading platform database as distinct objects with attributes defined in trade inputs. In addition to trade input, they use market data feeds to price a product in the form of a trade. The trading platform comes with a pricing interface which combines trade information and market data. It also runs in what they call batch mode — regularly at a given time of the day to compute prices and sensitivities of all trades. Since it is the trading platform that performs the batch job, the quantitative developers may take care of the associated resources like the grid computing platforms, market data feeds, trade databases etc. In this respect, their product-centric perspective may get diffused into a trade-centric view.