Tag Archives: Corporate Life

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?”

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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.

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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.

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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 (Vorderbüro,,en,Middle Office und Back Office,,en,und wies auf die Karrieremöglichkeiten für quantitative Fachkräfte innerhalb,,en,Die Organisationsstruktur der Bank ist der Apparat, der den dynamischen Lebenszyklus von Trades verarbeitet,,en,Wenn die Struktur der Bank der räumlichen Organisation entspricht,,en,Der Lebenszyklus des Handels ist die zeitliche Variation,,en,ihre Beziehung ist wie die der Schienen und der Züge,,en,Wir haben ziemlich viel Zeit mit dem Fluss der Trades zwischen dem Front-Office- und dem Middle-Office-Team verbracht,,en,wie die Trades genehmigt werden,,en,verarbeitet,,en,überwacht,,en,erledigt und verwaltet,,en,Jedes dieser Teams hat seine eigene Perspektive oder sein eigenes Arbeitsparadigma, mit dessen Hilfe sie ihre Aufgaben effizient ausführen können,,en,Handelsperspektiven waren das letzte wichtige Thema, das wir angesprochen haben,,en,Wie wir gesehen haben,,en, 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, Diese Perspektiven basieren auf der Art und Weise, wie die verschiedenen Teams der Bank ihre Aufgaben erfüllen,,en,Sie bilden den Hintergrund des Jargons,,en,und sind wichtig, wenn wir ein umfassendes Verständnis für die Funktionsweise einer Bank entwickeln wollen,,en,Am meisten wie viele,,ca,vor allem auf Junior-Ebenen,,en,verachten das große Ganze,,en,Sie betrachten es als Ablenkung von ihrer eigentlichen Arbeit, stochastischen Kalkül mit C zu verbinden,,en,Aber zu einem Händler,,en,Das beste Modell der Welt ist wertlos, wenn es nicht eingesetzt werden kann,,en,Wenn wir unsere Enge wechseln,,en,wenn auch effektiv,,en,Konzentrieren Sie sich auf die vorliegende Arbeit, um unsere Rolle und unseren Wert in der Organisation zu verstehen,,en,Wir werden die möglichen Fehlerquellen der Systeme und Prozesse sowie die Möglichkeiten sehen, etwas zu verändern,,en. 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. Wir sind dann besser in der Lage, unsere Karriere voll auszuschöpfen,,en,Computing,,en,Geld,,en,quantitative Finanzierung,,en,Wilmott,,en,Andere Handelsperspektiven,,en,In den vorherigen Beiträgen,,en,Wir haben gesehen, wie verschiedene Teams die Handelsaktivität in ihrem eigenen Arbeitsparadigma sehen,,en,Die in der Bank am weitesten verbreitete Perspektive ist nach wie vor handelsorientiert,,en,In dieser Ansicht,,en,Trades bilden die primären Objekte,,en,Deshalb verfolgen alle herkömmlichen Handelssysteme sie,,en,Stellen Sie eine Reihe von Trades zusammen,,en,Sie erhalten ein Portfolio,,en,Stellen Sie einige Portfolios zusammen,,en,du hast ein Buch,,en,Der gesamte globale Markt ist lediglich eine Sammlung von Büchern,,en,Dieses Paradigma hat gut funktioniert und ist wahrscheinlich der beste Kompromiss zwischen verschiedenen möglichen Ansichten,,en,Die handelsorientierte Perspektive,,en,jedoch,,en,ist nur ein Kompromiss,,en,Die Aktivitäten des Handelsraums können aus verschiedenen Blickwinkeln betrachtet werden,,en.

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. Jede Perspektive hat ihre Rolle in der Arbeitsweise der Bank,,en,Andere Perspektiven,,en,Aus Sicht der Händler,,en,Die Handelsaktivität ist auf die Anlageklasse ausgerichtet,,en,In der Regel mit einem bestimmten Trading Desk verbunden, der auf Anlageklassen basiert,,en,Ihre Lieblingsansicht erstreckt sich über Modelle und Produkte,,en,An Händler,,en,Alle Produkte und Modelle sind lediglich Werkzeuge, um Gewinn zu erzielen,,en,Die IT-Abteilung betrachtet die Handelswelt aus einer völlig anderen Perspektive,,en,Ihre Ansicht ist systemzentriert,,en,Dabei handelt es sich bei demselben Produkt, das dasselbe Modell verwendet und in zwei verschiedenen Systemen vorkommt, im Grunde genommen um zwei völlig unterschiedliche Bestien,,en,Diese Ansicht wird von den Händlern nicht besonders geschätzt,,en,wie viele oder wie viele Entwickler,,ca,Eine Ansicht, die die gesamte Bank schätzt, ist die Ansicht der Geschäftsleitung,,en,das ist eng auf das Endergebnis fokussiert,,en.

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. Die großen Chefs können Dinge priorisieren,,en,ob Produkte,,en,Anlageklassen oder -systeme,,en,in Bezug auf das Geld, das sie den Aktionären bringen,,en,Modelle und Trades sind in der Regel von oben nicht sichtbar,,en,es sei denn,,en,Schurkenhändler verlieren viel Geld für ein bestimmtes Produkt oder durch die Verwendung eines bestimmten Modells,,en,Wenn der Handel das Marktrisikomanagement erreicht,,en,Die Perspektive ändert sich geringfügig von einer Sicht auf Handelsebene zu einer Ansicht auf Portfolio- oder Buchebene,,en,Obwohl mathematisch trivial,,en,Nach alldem,,en,Der Unterschied ist nur eine Frage der Aggregation,,en,Diese Änderung hat Auswirkungen auf das Systemdesign,,en,Die Handelsplattform muss eine robuste hierarchische Portfoliostruktur beibehalten, damit verschiedene Würfel und Schnitte, wie sie in späteren Phasen des Handelslebenszyklus erforderlich sind, auf natürliche Weise gehandhabt werden können,,en (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.

Wenn es um Finanzen und ihre Vorstellungen von Kostenstellen geht,,en,Der Handel ist so ziemlich außerhalb des Buchungssystems,,en,Immer noch,,en,Sie verwalten Trading Desks und Kostenstellen für Anlageklassen,,en,Jede von uns entworfene Handelsplattform muss angemessene Hooks im System bereitstellen, um auch auf ihre spezifischen Anforderungen zu reagieren,,en,Eng verwandt mit dieser Sichtweise ist die Perspektive der Personalabteilung,,en,die Anreize auf der Grundlage der Leistung entscheiden, die anhand des Endergebnisses auf Kostenstellen- oder Teamebene gemessen wird,,en,Mittleres Büro,,en,Die Perspektive des Middle Office-Teams ist interessant,,en,Ihr Arbeitsparadigma ist das von Warteschlangen, die in einem First-In laufen,,en,First-Out-Modus,,en,Wie im Bild unten gezeigt,,en,Sie betrachten Trades als Teil von Validierungs- und Verifizierungswarteschlangen,,en,Wenn ein neuer Trade gebucht wird,,en, 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, Es wird von einem Ende in die Validierungswarteschlange verschoben,,en,Die Mitarbeiter des Middle Office greifen die Warteschlange am anderen Ende an,,en,Akzeptieren oder Ablehnen jedes Eintrags,,en,Diejenigen, die als gut eingestuft werden, werden in eine zweite Überprüfungswarteschlange gestellt,,en,Die schlechten werden zur Änderung der Handelseinträge oder möglichen Stornierungen an die Handelsschalter zurückgeschickt,,en,Middle Office-Perspektive,,en,Ein ähnliches Paradigma wird bei der Behandlung von Marktoperationen wie der Festsetzung von Zinssätzen angewendet,,en,Cashflow generieren etc.,,en,Marktoperationen haben ihre eigenen zweistufigen Warteschlangen,,en,Beachten Sie, dass der gesamte Ablauf durch die Handelsplattform erleichtert werden soll,,en,die die Fähigkeit haben sollte, verschiedene Ansichten zu rendern,,en,Es bietet dem Personal des mittleren Büros eine warteschlangenbasierte Ansicht der Daten,,en,und eine berichtsbasierte Ansicht für das Market Risk Management-Team,,en,zum Beispiel,,en. 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, oder eine handelsorientierte Sicht auf die meisten anderen Teams,,en,Für jedes Team ist es wichtig, ein grundlegendes Verständnis und einen gesunden Respekt für das Arbeitsparadigma des anderen zu haben, damit sie effizient miteinander kommunizieren können,,en,Es ist nicht gut, die Handelsperspektiven des Restes der Bank zu ignorieren,,en,Nach alldem,,en,Solche Handelsperspektiven entwickelten sich natürlich aus jahrelangen Versuchen und Irrtümern,,en,Quant Entwickler,,en,Im Gegensatz zu wie vielen,,ca,Quantitative Entwickler sind produktorientierter,,en,Ihre Aufgabe ist es, die Preismodelle zu übernehmen,,en,die Ausgabe des quantitativen Aufwands,,en,und machen sie einsetzbar und für die Händler zugänglich,,en,Verkaufsteams und das mittlere und hintere Büro,,en,Ihre primäre Arbeitseinheit ist ein Produkt, denn wenn sich die Produktdefinition ändert,,en,unabhängig davon, ob ein neues oder ein vorhandenes Preismodell verwendet wird,,en. 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 bosswhat 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 actwatching 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 torechargeourselves 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, Sie müssen es in das System integrieren,,en,Auch wenn es sich lediglich um eine Produktvariante handelt,,en,Sie müssen die gesamte Infrastruktur implementieren und sich um die Genehmigungsprozesse für die nachgelagerte Abwicklung kümmern,,en,Deshalb,,en,Das Arbeitsparadigma, das für einen quantitativen Entwickler am sinnvollsten ist, ist produktorientiert,,en,Quant Entwicklerperspektive,,en,Im Vergleich zu den Quants,,en,Die quantitativen Entwickler sind näher an den täglichen Aktivitäten im Front Office und Middle Office,,en,Sie sehen die Trades,,en,identifiziert durch eindeutige IDs,,en,als Instanziierungen von Produkten,,en,Einmal gebucht,,en,Sie landen in der Handelsplattformdatenbank als unterschiedliche Objekte mit Attributen, die in Handelseingaben definiert sind,,en,Neben Handelsinput,,en,Sie verwenden Marktdaten-Feeds, um ein Produkt in Form eines Handels zu bewerten,,en. 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. Die Handelsplattform verfügt über eine Preisschnittstelle, die Handelsinformationen und Marktdaten kombiniert,,en,Es läuft auch im sogenannten Batch-Modus,,en,regelmäßig zu einer bestimmten Tageszeit, um die Preise und Empfindlichkeiten aller Geschäfte zu berechnen,,en,Da es die Handelsplattform ist, die den Batch-Job ausführt,,en,Die quantitativen Entwickler können sich um die zugehörigen Ressourcen wie die Grid-Computing-Plattformen kümmern,,en,Marktdaten-Feeds,,en,Handelsdatenbanken usw.,,en,Insofern,,en,Ihre produktorientierte Perspektive kann sich in eine handelszentrierte Sichtweise verwandeln,,en,Wie viele,,ca,August,,en,Wenn Sie ein Quant sind,,en,Sie sind Mathematiker mit einem fortgeschrittenen Abschluss in Mathematik oder Physik,,en,Ihre Arbeit basiert sowohl auf akademischer als auch auf professioneller Forschung,,en,Peer-Review-Veröffentlichungen,,en,Sie nehmen Ihre Eingaben von ihnen,,en. 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.