Quant Roles

This article discusses some of the roles and career paths that quantitative engineers and financial engineers take.  Before you start a career in the financial engineering world, it would be good to understand what it is you would be doing all day.

Fund Management Areas:

  • Front Desk - Typically involved in actions around buying and selling stocks, Commodities, Derivatives or other.  Frequently developing trading strategies that will be delegated to traders or computer programs to carry out.  This is one of the largest areas of employment for quants.  The reason is that this directly involves developing strategies and being able to develop mathematical models to predict or engineer some form of arbitrage profits based on inconsistent valuations.
  • Middle Desk - This role typically revolves around Risk Mitigation and Exception management.  In this tier Quants develop models to predict risk, or identify exceptions.  Exceptions can either be rules and safeguards that a fund administratively puts in place, or it could be checks to ensure that the fund is within regulatory compliance.
  • Back Desk -  This is the accounting side of things.  Once the trades have been executed and the position is known, you have to be able to calculate a Net Asset Value (NAV).  This role is not as straight forward as one would think.  Some assets are illiquid and therefore do not have a fair market value as there where no trades.  Therefore asset valuation models have to be used.  Also, some assets like options are out-of-the-money but have a long time to expiry.  The asset has no executable value, but it does have a "market" value.  These assets can be mark-to-market or mark-to-model.  Finally taxing strategies and other techniques to maximize profit are analyzed here.

 




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