April 1, 2014

Young Guns Hit the Trading Floor

Fresh-faced yet experienced graduates are entering investment firms in strong numbers. And this crop of bright young things is bringing new skills and placing new demands on the buyside.

By Maggie Patrick

While many young people dream of jobs at Google and Snapchat-or starting the next Web 2.0 giant-there are still plenty of smart, ambitious twentysomethings looking to be analysts, investment bankers and traders inside asset management firms and hedge funds. This spring, Varun Tomar receives his master's in financial engineering from the University of California at Berkeley, and he already has a job lined up. The 26-year-old, whose family relocated to the U.S. from New Delhi, India, in 2005, will pack his bags and move to Chicago. He begins his new career as a quantitative trader on the currency and U.S. Treasury desk at Sun Trading, a quant hedge fund with offices on South Wacker Drive.

As an undergrad computer engineering student at University of Michigan, Tomar became well versed in C++ programming and then went to work at Spot Trading writing algos and watching them go live. Tomar worked at the Chicago prop trading firm for three and a half years, up until January 2013, before starting his graduate work. Now, he looks forward to being the person creating the trading strategy, maximizing his P&L and putting those younger quants-his former self-to work on his own terms.

If you want an idea of the current job market, always ask someone who has been looking for work. According to Tomar, there are four areas of expertise in high demand: econometrics, statistics, machine learning and programming. He felt that his three and a half years at Spot Trading gave him the exposure to the industry and helped him clarify his goal: being the driving force behind the trading models and strategies for high-speed trading algos.

"At 23, 24 years old, when I was working at Spot Trading, I would write algos in my spare time for my own personal investing in the currency markets," Tomar told Traders. With this degree of ambition, he was not going to settle for merely maintaining his budding career. He looked to Berkeley's financial engineering program to expand his understanding of trading strategies, he said. "When I was at Berkeley, there were students from all over the world, Ph.D's, physicists, even professors, who had come back to school for a master's in financial engineering. This is the culmination of a lifelong ambition for me."

Tomar is not alone. According to new findings by market research firm Tabb Group, the buyside is hiring quants, especially those with "sell-side levels of sophistication." In the first part of the firm's three-part annual survey titled "U.S. Institutional Equity Trading 2014: Bellwethers of the Buy Side," director of research Adam Sussman and his team at Tabb Group interviewed 108 heads of U.S. equity trading desks at traditional asset managers with an aggregate of equity commissions of nearly $2.5 billion in 2013. According to Sussman, buyside firms are looking for quants to fill roles in several points in the trading process, from portfolio manager alpha modeling to venue analysis and internal routing optimization.