After writing 6 long posts on my experiences in EGB IT, I realised I still missed out many points. Here they are in no particular order.
So after nearly 7 years on EGB technology teams I have moved on. Not out of banking (at least not yet), but when the opportunity came to try a different business area I jumped. This is despite being able to earn more money if I stayed in my EGB niche. There are two related reasons for leaving: the industry and technology are both changing to the detriment of developers.
When I started in 2005, EGB trading was already on an upswing that lasted through 2009. I'm not sure when this upwards trajectory began, but the people around me considered it normal. Business was good throughout the mortgage and banking crisis of 2008. When times are good and the desks are making good money some of it is reinvested into technology. There was a lot of optimism and this translated into banks wanting the fastest and smartest trading platform. We got to rewrite systems. Increasingly business was relying on technology - it was becoming trade-by-wire. It seemed that there was much further to go. Algorithmic trading is big in equities, why couldn't it be big in fixed income too. There was huge potential for writing interesting code.
This environment no longer exists. It was only when the European debt crisis began to bite in 2011 that things trended downwards, but then they went down fast. There is a great deal less ambition among the fixed income desks. Most traders seem happy just to not be losing money - something many are not achieving. Some banks are shutting down their bonds desks. As a natural consequence there is less to spend on technology and little desire to do more than maintenance. Flow volume is king, and as far as technology development is concerned, that is not hard. Thus less developers are required and the work is less interesting.
Combined with this is the creeping commoditisation of bonds technology. When I started Ion provided mainly gateways, little tools and their message bus. Over time they have climbed up the product stack. Now they also sell pricing engines, autoquoters, autohedgers, risk engines, position servers - nearly everything a bank needs to trade cash bonds. The quality is fine too. Their applications won't do everything a desk requires, but it will do most of it and the desk's technology team can add the remainder quickly. Not all banks will use vendor systems (many don't like Ion or see advantage in bespoke systems), but enough will to affect the market for EGB technologists.
Thus, once again, less developers are required and the work is less interesting. I don't see the situation changing until the market improves - and I don't see that happening soon. So I thought it time to try a different business area.
Just 12 months ago I said I hoped to achieve the below by the start of this year:
For the coming year I have decreased the number of goals, mainly because there are a few big ones:
Plus as a nice to do, if I have time:
Modern investment trading relies very heavily on technology. Computers are now involved in nearly every corner of large banks' trading activities - a big change from more manual processes over 20 years ago. It would certainly be impossible to run a EGB primary dealership without significant technology expenditure. This post details an overview of the technologies I saw on EGB desks.
Over my time working for EGB desks I was always a Software Developer, and software is the part of the industry I know best. Code written in banks is not especially different to other places, although there is a difference in attitude. This starts before a person even joins a bank.
Time for another rant. I recently read this Forbes article suggesting that the short-term financial tools learnt by management during their MBAs are killing business. Having finished a MBA, I completely agree. As well as the financial indicators mentioned in the article, we were also taught to focus on cutting a company down to its core competencies and thus raising return on equity. Strangely it was always assumed that management was a core competency. I think this was related to the teachers attitude towards students.
There was a split in the lecturers that taught us business. Most were faculty in other departments. We were taught law by a professor from the law school, accounting from the accounting department, economics from the economics department and so on. These people just taught the subject at hand - normally very well. However, the "core" MBA classes (management, strategy, etc) were taught by the business faculty and they seemed to have an agenda beyond the syllabus. They saw themselves as wise men teaching the next generation of world leaders (because business defined the world). They were Aristotle educating Alexander. One lecturer of strategy particularly epitomised this mindset. He taught us to "think like a CEO". This seemed to be a solitary uber-man guiding the firm singlehanded and with precise execution - success or failure was solely his reponsibility. I didn't like his Randian/Nietzschean worldview (I got a below average mark - the worst of my degree). Most students appeared to lap it up. He told them what they wanted to hear - they were special, destined for greatness and the cost of the MBA was money well-spent. Other business lectureres clearly held similar views.
I can easily imagine those students that succeeded in business by luck, skill or most likely both, did come to see themselves as special. We were also taught that having a strong sense of personal agency was correlated with business success. However so is believing failures are caused extraneous factors. Success is yours, but failure is not.
Assuming senior management see themselves as the source of competitive advantage can explain much of modern business' more egregious practices. Huge bonuses, we are the one who make the money. Outsourcing, those people aren't needed. Perks, we deserve it. Isolating senior management from other employees, they have nothing of value to contribute.
While in Cornwall we visited the Nathan Outlaw Restaurant at the St Enodoc Hotel in Rock (eponymously named for its occasional TV chef). Strangely there are two Nathan Outlaw restaurants at the hotel: a two Michelin star restaurant only serving a tasting menu; and a no star al a carte seafood grill. Preferring choice we booked at the grill.
We first noticed the restaurant was completely empty. Of course a rainy Monday night at the end of November in Cornwall is about as off-peak as it is possible to get. Still it was surprisingly to see it was just us and a single waitress. Needless to say the staff were attentive, but they were also professional yet friendly. Two hours later when we left, there were 8 other diners in a place that could easily handle four times that number.
I had the onion soup for starters - fine but nothing special. My partner had the largest and most flavoursome mussels I have ever tasted (but I only got a small taste). We both had the char-grilled Gurnard fillets as our main course, with crab sauce (as recommended by our waitress). I had never even heard of this fish before, let alone tasted one. However, I can proclaim it tasty! The beautifully cooked fillet had a quite solid texture (for fish) and had a very slight earthy/gamey taste. It went well with the sauce. Dessert was a delicious chocolate sponge. It all came to around £130 with a bottle of wine and service charge - not bad by London standards. Definitely worth a visit if you are in the area.
Calculating the price of an EGB bond has to be fast. A big bank may have 400 or so European bond obligations and the quotes need to be recalculated quickly when the market moves. It is possible to recover from incorrect prices on D2C markets, with their negotiable RFQs. However, if an executable D2D quote is wrong then the trader will likely lose money.
An enforced gap in contracts meant I suddenly had a week free, so time for a quick extra long weekend to North Cornwall. We stayed in Boscastle and visited various local towns like Polzeath and Tintagel , with a quick stopoff at Stonehenge on the way home (just to say I've been). A pleasant trip, although the weather could have been better. Although when the weather is good, the area is packed with tourists - for us the place was largely empty. It was a short trip (with bad light), so only a few photos in the Flickr slideshow viewable here.
I recently had a disturbing revelation. A friend and I were talking about the book Lolita, which I read about 15 years ago. It seemed as if we had read different books. The broad structure of the plot was the same for both of us, but some important details were different. Aged 12, their Lolita was substantially younger than the girl around 15 I remembered. I recalled Humbert being pathetic and occasionally cruel, but not pathologically predatory - unlike Quilty. My friend pointed out a number of plot points I didn't recollect at all to contradict me. Double checking against the book demonstrated they were completely right.
Usually I have a very good memory of plots. It was a little concerning how wrong I was. Then I realised I was remembering the 1962 Kubrick film. In my mind the book had been completely overwritten by the less confrontational movie (so it could reach a wider audience) and I had no notion this had occurred. Quilty looked like Peter Sellers; Lolita was 14, but played by an actress that looked older. It is like I never read the book at all. Has this happened with other memories too - I have no idea.
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