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, et l'eBook associé,,en,est une version étendue des chapitres d'introduction non techniques du livre,,en,quelles sont les choses que nous devons garder à l'esprit lors de la conception d'une plateforme de trading,,en,Pourquoi est-il important d'avoir une vue d'ensemble de la finance et de la banque,,en,Avec un peu de chance,,en,ces articles vous en ont donné un avant-goût ici,,en,Si vous gardiez une copie de la série à portée de main,,en,vous pouvez acheter et télécharger le,,en,eBook magnifiquement conçu,,en,Achetez la version eBook pour seulement,,en,version,,en,Prochaines étapes,,en,Nous avons parcouru la structure de la banque du point de vue du trading exotique et structuré,,en,Nous avons parlé des différents bureaux,,en,Bureau d'accueil,,en,Middle Office et Back Office,,en,et souligné les opportunités de carrière des professionnels quantitatifs au sein,,en, 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. La structure organisationnelle de la banque est l'appareil qui traite le cycle de vie dynamique des métiers,,en,Si la structure de la banque s'apparente à l'organisation spatiale,,en,le cycle de vie du métier est la variation temporelle,,en,leur relation est comme celle des rails et des trains,,en,Nous avons passé pas mal de temps sur le flux des échanges entre les équipes front office et middle office,,en,comment les métiers sont approuvés,,en,traité,,en,surveillé,,en,réglé et géré,,en,Chacune de ces équipes a sa propre perspective ou paradigme de travail qui les aide à mener à bien leurs tâches de manière efficace,,en,Les perspectives commerciales ont été le dernier sujet majeur que nous avons abordé,,en,Comme nous l'avons vu,,en,ces perspectives sont basées sur la manière dont les différentes équipes de la banque accomplissent leurs tâches,,en,Ils forment la toile de fond du jargon,,en.

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, et sont importants si nous voulons développer une compréhension globale du fonctionnement d'une banque,,en,La plupart combien,,ca,surtout aux niveaux juniors,,en,méprise la vue d'ensemble,,en,Ils y voient une distraction par rapport à leur vrai travail de marier le calcul stochastique au C ,,en,Mais pour un commerçant,,en,le meilleur modèle au monde est sans valeur s'il ne peut être déployé,,en,Quand nous changeons notre étroit,,en,bien qu'efficace,,en,se concentrer sur le travail à accomplir pour comprendre notre rôle et notre valeur dans l'organisation,,en,nous verrons les points de défaillance possibles des systèmes et des processus ainsi que les opportunités de faire la différence,,en,Nous serons alors mieux placés pour mener notre carrière à son plein potentiel,,en,Autres perspectives commerciales,,en,Dans les articles précédents,,en. 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, nous avons vu comment différentes équipes voient l'activité de trading dans leur propre paradigme de travail,,en,La perspective la plus courante dans la banque est toujours centrée sur le commerce,,en,les métiers forment les objets primaires,,en,c'est pourquoi tous les systèmes de trading conventionnels les suivent,,en,Rassemblez un tas de métiers,,en,vous obtenez un portfolio,,en,Rassemblez quelques portefeuilles,,en,tu as un livre,,en,L'ensemble des marchés mondiaux n'est qu'une collection de livres,,en,Ce paradigme a bien fonctionné et est probablement le meilleur compromis entre différentes vues possibles,,en,La perspective centrée sur le commerce,,en,n'est qu'un compromis,,en,Les activités de la salle des marchés peuvent être vues sous différents angles,,en,Chaque perspective a son rôle dans le fonctionnement de la banque,,en,Autres perspectives,,en,Du point de vue des commerçants,,en,l'activité de trading semble centrée sur la classe d'actifs,,en. 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. Généralement associé à des pupitres de négociation particuliers en fonction des classes d'actifs,,en,leur vue préférée traverse les modèles et les produits,,en,Aux commerçants,,en,tous les produits et modèles ne sont que des outils pour faire du profit,,en,Le service informatique voit le monde du trading sous un angle complètement différent,,en,Leur vision est centrée sur le système,,en,où le même produit utilisant le même modèle apparaissant dans deux systèmes différents est fondamentalement deux bêtes complètement différentes,,en,Ce point de vue n'est pas particulièrement apprécié des commerçants,,en,combien ou combien de développeurs,,ca,Un point de vue que toute la banque apprécie est celui de la direction,,en,qui se concentre étroitement sur la ligne du bas,,en,Les grands patrons peuvent prioriser les choses,,en,si les produits,,en,classes d'actifs ou systèmes,,en,en termes d'argent qu'ils rapportent aux actionnaires,,en, 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. Les modèles et les métiers ne sont généralement pas visibles de leur vue du haut,,en,sauf si,,en,les commerçants malhonnêtes perdent beaucoup d'argent sur un produit particulier ou en utilisant un modèle particulier,,en,Lorsque le commerce atteint la gestion des risques de marché,,en,il y a un changement subtil dans la perspective d'une vue au niveau du commerce à une vue au niveau du portefeuille ou du livre,,en,Bien que mathématiquement trivial,,en,la différence n'est qu'une question d'agrégation,,en,ce changement a des implications dans la conception du système,,en,La plate-forme de négociation doit maintenir une structure de portefeuille hiérarchique robuste afin que les divers découpages en dés et découpages requis dans les dernières étapes du cycle de vie des échanges puissent être traités avec une facilité naturelle,,en,En matière de Finance et de leurs notions de centres de coûts,,en,le commerce est quasiment hors du système de réservation,,en — 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, ils gèrent les bureaux de négociation et les centres de coûts des classes d'actifs,,en,Toute plateforme de trading que nous concevons doit fournir des crochets adéquats dans le système pour répondre également à leurs exigences spécifiques.,,en,La perspective des ressources humaines est étroitement liée à ce point de vue,,en,qui décident des incitations en fonction des performances mesurées en termes de résultats financiers au niveau du centre de coûts ou de l'équipe,,en,La perspective employée par l'équipe Middle Office est intéressante,,en,Leur paradigme de travail est celui des files d'attente s'exécutant dans un premier entré,,en,mode premier sorti,,en,Comme le montre l'image ci-dessous,,en,ils pensent que les métiers font partie des files d'attente de validation et de vérification,,en,Lorsqu'un nouvel échange est réservé,,en,il est poussé dans la file d'attente de validation d'un bout,,en,Le personnel du Middle Office attaque la file d'attente de l'autre côté,,en,accepter ou rejeter chaque entrée,,en. 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. Ceux jugés bons entrent dans une deuxième file d'attente de vérification,,en,Les mauvais sont renvoyés aux pupitres de négociation pour modifications dans les entrées commerciales ou annulations éventuelles,,en,Perspective Middle Office,,en,Un paradigme similaire est utilisé pour traiter les opérations de marché telles que la fixation des taux,,en,générer des flux de trésorerie, etc.,,en,Les opérations de marché ont leurs propres files d'attente en deux étapes,,en,Notez que l'ensemble du flux doit être facilité par la plateforme de trading,,en,qui devrait avoir la capacité de rendre différentes vues,,en,Il présente une vue des données basée sur la file d'attente au personnel du middle office,,en,et une vue basée sur des rapports pour l'équipe de gestion des risques de marché,,en,ou une vue centrée sur le commerce pour la plupart des autres équipes,,en. 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. Il est important pour chaque équipe d'avoir une compréhension de base et un respect sain du paradigme de travail de l'autre afin qu'ils puissent communiquer efficacement entre eux,,en,Il ne sert à rien d'ignorer les perspectives commerciales du reste de la banque,,en,ces perspectives commerciales ont évolué naturellement après des années et des années d'essais et d'erreurs,,en,Développeurs Quant,,en,Contrairement à combien,,ca,les développeurs quantitatifs sont plus centrés sur le produit,,en,Leur travail consiste à prendre les modèles de tarification,,en,la sortie de l'effort quant,,en,et les rendre déployables et accessibles aux commerçants,,en,équipes commerciales et middle et back offices,,en,Leur principale unité de travail est un produit car lorsque la définition du produit change,,en,qu'il utilise un modèle de tarification nouveau ou existant,,en,ils doivent l'intégrer dans le système,,en. 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, they have to integrate it into the system. Même s'il ne s'agit que d'une variante de produit,,en,ils doivent mettre en œuvre toute l'infrastructure et prendre en charge les processus d'approbation pour sa gestion en aval,,en,Pour cette raison,,en,le paradigme de travail qui a le plus de sens pour un développeur quantitatif est centré sur le produit,,en,Point de vue du développeur quant,,en,Comparé aux quants,,en,les développeurs quantitatifs sont au plus près des activités quotidiennes sur le Front Office et le Middle Office,,en,Ils voient les métiers,,en,identifié par des identifiants uniques,,en,comme instanciations de produits,,en,Une fois réservé,,en,ils se retrouvent dans la base de données de la plateforme de trading en tant qu'objets distincts avec des attributs définis dans les entrées commerciales,,en,En plus des intrants commerciaux,,en,ils utilisent des flux de données de marché pour fixer le prix d'un produit sous la forme d'un échange,,en,La plateforme de trading est livrée avec une interface de tarification qui combine des informations commerciales et des données de marché,,en, 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. Il fonctionne également dans ce qu'ils appellent le mode batch,,en,régulièrement à une heure donnée de la journée pour calculer les prix et les sensibilités de tous les métiers,,en,Puisque c'est la plateforme de trading qui effectue le travail par lots,,en,les développeurs quantitatifs peuvent prendre en charge les ressources associées comme les plateformes de calcul en grille,,en,flux de données de marché,,en,bases de données commerciales, etc.,,en,A cet égard,,en,leur perspective centrée sur le produit peut se diffuser dans une vision centrée sur le commerce,,en,Combien,,ca,Si vous êtes un quant,,en,vous êtes mathématicien avec un diplôme d'études supérieures en mathématiques ou en physique,,en,Votre travail est basé à la fois sur la recherche académique et professionnelle,,en,publications évaluées par des pairs,,en,Vous prenez vos contributions d'eux,,en,appliquer votre propre intelligence formidable pour créer un modèle de tarification stochastique qui, selon vous, fonctionnera exceptionnellement bien pour une classe de produits,,en — 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.