How the Trading Floor Really Works

Conclusion

The idea that there is a back room in banks where a team of quants sits and develops models to arbitrage the financial market is mostly a myth. There are always attempts to use a complex model by a small team of quants who believe that they understand the market better than anyone else and as a result are able to arbitrage the market. But those attempts happen as often within banks as outside of banks and, while some might be successful on a small scale, they are rarely successful on a large scale.

Quants are active members of the front office trading team primarily in the structured and tailored products. They are also heavily involved in risk management across all products. They are responsible for developing and maintaining the ...