With 2018 forecasts showing hedge fund asset growth of 5.5% – aided in principle by the advent and application of machine learning – algorithmic trading has become essential to the sector’s ongoing expansion.
Historically, many systematic hedge funds used execution algorithms which were built off-site to save on the outlay of bringing in resource. However, over the last 12 months, we have witnessed a shift in the opposite direction. Since faster access to markets and liquidity are topping priority lists across the buy side, there has been a steady rise in demand for specialists who can create and implement algorithms in-house.
These individuals (typically with the title of Algo Execution Developer) are tasked with leading the build out of execution algorithms, and providing expertise around transaction cost analysis (TCA), market microstructure and smart order routing. Their chief concern? More often than not, to ensure these hedge funds have the tools required to remain competitive in a latency-conscious market.
Individuals who understand both the modelling and research, and technology and development aspects of execution algorithms are particularly hot commodities in the quant space. This is down to their ability to simultaneously design, deliver and interpret microstructure, as well as communicate its effect on funds post-implementation.
The best Algo Execution Quants are equally as competent in these areas, completing modelling and research, while capably producing robust TWAP and VWAP algorithms. Such expertise will no doubt prove invaluable as systematic funds look to retain their edge in an increasingly volatile market where accelerating data and technology costs are eating into profits.
Oliver James Associates has operated in the quant space since 2015, and as such, has gained unrivalled insight into the inner workings of this complex yet rewarding niche.
To discuss the latest market news, potential opportunities or talent requirements, please contact Denesh Gnanalingam on +442038619140, or Nick Derewlany on +442038619148.